Volvo Cars has a strategic direction to become fully electric by 2030 and shape the future of mobility. In line with those strategic ambitions, Volvo Cars will divest its 33% holding in Aurobay to Geely Holding. Aurobay will become part of the new global company specializing in hybrid and low- emission powertrains being formed by Renault and Geely. (Earlier post.)

The divestment is yet another important step in Volvo Cars’ transformation towards becoming a fully electric car manufacturer. It also makes Volvo Cars the first car manufacturer to fully exit its participation in the development and manufacturing of internal combustion engines.

In line with its electrification ambitions, Volvo Cars will focus its investments and capital allocation on developing high performance fully electric powertrains.

During this period of transition to a fully electric future, Aurobay will remain a strategic partner to Volvo Cars and the sole provider of hybrids and mild-hybrid powertrains.

We are impressed by the progress Aurobay has made as a separate entity since its creation in 2021. In line with our ambition to become fully electric by 2030, Aurobay remains our strategic supplier.

—Javier Varela, chief operating officer and deputy CEO at Volvo Cars

Aurobay was formed as a stand-alone business in 2021 when Volvo Cars Powertrain Engineering Sweden, including its Skövde-based engine plant and the related R&D team, along with its engine plant in China and other relevant assets, were carved out from Volvo Car Group.

In the push towards net zero, Aurobay is currently working on several different technology projects—including a zero-emission engine, with zero impact across the entire lifecycle. Aurobay’s zero-emission engine project would be powered by a renewable fuel made from waste and make use of innovative technology to pre-heat the catalytic converter before a cold start.

When made from recycled materials at Aurobay’s Skövde factory, its manufacturing and materials footprint would be 80% lower than previous engines. Over its lifecycle, it is likely to impact global warming only as much a battery electric vehicle powered by wind. The zero-emission engine also features Aurobay’s innovative exhaust-after-treatment system which reduces toxic emissions from cold starts almost to zero, and goes beyond Euro 7-compliance.

The detailed terms of the transaction are not disclosed. The proceeds from the divestment will be used in Volvo Cars’ transformation to a fully electric company, including its new production line for electric motors in Skövde, Sweden. The transaction is expected to be closed before year end 2022, provided necessary regulatory approvals have been obtained.