The future of both brands depends on it.
China's Geely purchased Sweden's Volvo from Ford back in 2010. Today, Volvo is thriving. It continues to aggressively pursue new technologies and aims to become an all-electric automaker in the not too distant future, joining the ranks of Jaguar and General Motors. And the Volvo XC40 Recharge is only the beginning. In recent months, there have been talks about a possible merger between Volvo and Geely, but that's now been officially ruled out.
Volvo has just announced plans to strengthen its cooperation with Geely instead. Both brands have concluded they're better off continuing to be standalone companies. However, they will maintain the existing corporate structure and begin to collaborate even further in the realms of electrification, software, and self-driving technology.
They also hope to jointly source batteries, electric motors, related EV hardware, and various connectivity solutions. Mergers are not always the best thing because brands risk losing momentum and the culture that helps achieve that. However, the newly enhanced collaboration agreement will be overseen by a new governance model led by Geely Holding, the main shareholder in both brands.
"Having evaluated different options to realize value, we concluded jointly that a collaboration model between two standalone companies is the best way to secure continued growth and at the same time achieve technological synergies in many areas," said Volvo CEO Hakan Samuelsson.
However, it's still entirely possible Volvo will seek its own listing at some point. Back in 2018, it decided against an initial public offering after receiving word from investors the automaker would have been assigned a low evaluation. But things are changing relatively fast these days as automakers continue to develop plans to phase out the internal combustion engine. Volvo has been one of the more progressive automakers in realizing the ICE is on borrowed time.
Its focus on developing numerous technologies in-house, combined with the newly strengthened relationship with Geely, could place Volvo in a better position for a higher IPO valuation in the coming years, and the rumored Tesla Model 3 fighter in the cards could help strengthen this further.