Volvo Cars will divest its 33% stake in engine maker Aurobay to Geely Holding, a Chinese multinational automotive company, in an effort to become a fully electric car manufacturer by 2030.

The financial terms of the deal were not disclosed.

The proceeds from the stake sale will be leveraged to convert Volvo Cars into a fully electric company, including its new manufacturing unit for electric motors in Skövde, Sweden.

The divestment will also mark Volvo Cars exit from the development and manufacturing of internal combustion engines space.

Johan Ekdahl — Volvo Cars CFO said: “The automotive industry is going through rapid change and Volvo Cars is committed to lead this transformation.

“As we continue to execute on our strategy, transactions like this will be an important supplement to our investments and partnerships for the future.”

Volvo Cars will now focus its investments and capital allocation on high performance 100% electric powertrains manufacturing.

Aurobay, however, will act as a strategic partner to Volvo Cars and the exclusive provider of hybrids as well as mild-hybrid powertrains during the transition to a fully electric future.

Javier Varela — Volvo Cars Chief Operating Officer and Deputy CEO said: “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.”

Started as an independent business last year, Aurobay develops and produces powertrain solutions, apart from providing contract manufacturing, propulsion technology and development services.

Aurobay with manufacturing capabilities in two continents was formed when Volvo Cars Powertrain Engineering Sweden, including its engine plant based in Skövde and the associated research and development (R&D) team, along with its Chinese engine plant and other related assets, were spun out from Volvo Car Group.

Subject to necessary regulatory approvals, the transaction is likely to close by the year-end.

  Aurobay, electric vehicles, Geely Holding, Javier Varela, Johan Ekdahl, Skövde, Sweden, Volvo Cars