Geely and Volvo merge into new company

On the evening of the 24th, Geely and Volvo jointly announced the merger. However, this merger is not the integration of assets and businesses between the two companies in the traditional sense. The main reason is that the two companies merged the powertrain business into a new company.

Geely and Volvo jointly declared that the two parties have reached the best merger plan. This plan is to continue to expand the cooperation field on the basis of maintaining the respective existing independent company structures, deepen cooperation in automobile electrification, intelligence, networking, and sharing, exert synergy effects, and realize the maximum value of business integration.

This merger is not the integration of assets and businesses between the two companies in the traditional sense. The main reason is that the two companies merged the powertrain business into a new company, which is planned to be put into operation before the end of the year. The business scope of the new company is mainly to develop a new generation of dual-motor hybrid power systems and high-efficiency internal combustion engines.

Regarding the merger, Li Shufu, chairman of Geely Holding Group, said: "The global automotive industry is facing profound changes and must seek openness and coordination, and unity."

Last year, my country's automobile market was in a downturn, and passenger car sales fell by 6.8% year-on-year. Under multiple unfavorable conditions, NEVs have bucked the trend and outperformed the market with a growth rate of over 10% in 2020, giving car companies a glimmer of hope in the dark.

In the context of policy inclination and consumers' increasing willingness to buy electric vehicles, the China Automobile Association predicts that 1.8 million new energy vehicles will be sold in 2021, a year-on-year increase of 40%. This market segment has received strong attention from all parties.

At present, Geely and Volvo have their own SEA architecture and SPA2 electric vehicle architecture in addition to the CMA architecture on the electric vehicle platform. It is understood that the above two structures are not fully authorized to share, and the only brand that can use these two structures at the same time is the joint venture Lynk & Co.

In this cooperation, the two companies are planning to share the new SEA and SPA2 electric architectures with their respective brands. Not only that, the two parties have already started the joint development of the next generation of pure electric exclusive modular architecture, realizing the sharing of core technological achievements and the advantages of scale. In the future, Volvo, Geely, Lynk & Co and Polestar will all share this structure.

However, there are still many technical problems to be overcome on the road of vigorous development of electrification. For traditional car companies, the transition and support of hybrid technology is the best choice.

Gradually transform, hybrid vehicles will become the mainstream of the market in the medium and long term

Geely announced in November last year that Daimler AG and Geely Holding Group will use the global R&D network of both parties to jointly develop next-generation gasoline engines for hybrid technology.

At present, Geely has developed the 48V BSG hybrid technology, but one more powerful ally will occupy more of the new energy market.

As representatives of independent brands, BYD and Great Wall Motors are worth learning from their transition to electrification. Great Wall Motors has released the "L.E.M.O.N. hybrid DHT" technology, which covers the three major categories of global SUV, sedan, and MPV markets from the development of five vehicle levels: A0, A, B, C, and D.

BYD, not long ago, also made a breakthrough in the hybrid field, releasing the DM-i super hybrid system. This hybrid system is mainly powered by electricity, and has multiple advantages such as fast, economical, quiet, smooth, and green.

Although new energy-driven methods must be the mainstream of the industry in the future, electric vehicles cannot replenish fuel like fuel vehicles in the first time, and endurance anxiety has become its biggest bottleneck. At this time, the hybrid mode has become the first choice for car companies to transform to pure electric vehicles.

Li Jun, Academician of the Chinese Academy of Engineering, chairman of the Chinese Society of Automotive Engineering, and professor at Tsinghua University, previously proposed that by 2035, my country’s annual sales of energy-saving vehicles and new energy vehicles will each account for half, and traditional energy-powered passenger vehicles will all be converted to hybrid power. So as to realize the full electrification transformation of the automobile industry.

In 2020, Geely Automobile will continue to be the sales champion of Chinese brand passenger vehicles with a total sales of 1,320,217 units. Among them, in terms of new energy vehicles, new energy and electrified products such as Geometry A, Geometry C, Emgrand EV, Emgrand GSe, etc., sold 68,142 vehicles last year, accounting for only 5.2% of the total sales.

Not only that, through the 2020 new energy vehicle sales rankings released by CPCA, it is found that Geely new energy vehicles are not seen in the top ten sales models. It can be seen that, unlike the hot sales of fuel vehicles, Geely does not have the lead in electric vehicles.

Perhaps it is aware of its slow development in this segment of the market. Entering 2021, Geely has accelerated the pace of development in the direction of new energy.

On January 11, Geely announced the formation of a smart electric vehicle company with Baidu. On January 13, Geely and Foxconn cooperated to establish a joint venture company. On January 19, Geely Automobile announced the signing of a strategic cooperation agreement with Tencent to promote digital transformation. On January 29, Geely also signed a framework cooperation agreement with Faraday Future.

In fact, as early as 3 years ago, Geely began to deploy new energy-related industries. In 2018, Geely announced that its subsidiary Zhejiang Jirun Automobile Co., Ltd. has established a joint venture with CATL to engage in the research and development, manufacturing and sales of batteries, battery modules and battery packs. On December 24 last year, Geely Technology Group Co., Ltd. signed a strategic cooperation agreement with Farasis Energy to establish a joint venture to build a power battery production plant.

It can be seen that Geely not only lays out its core technology batteries, but also actively embraces intelligence and networking, and continues to increase its efforts to promote the transformation and upgrading of its new energy business.

Summary: Looking at the global market, automotive technology is developing in the direction of "low-carbon and intelligent". As the leader of independent brands, Geely is not prominent in electrification. However, from the recent news of cooperation, it can be seen that companies are constantly improving the new energy industry chain. In the future, facing a battlefield full of gunpowder, Geely is likely to stand out as a representative of the transformation of traditional car companies.