The days of Volvo’s in-house combustion engine production are coming to an end. Volvo and Geely have started a powertrain company called Aurobay, a new joint venture that will be a stand-alone business, which will let Volvo focus its attention on producing EV drivetrains. It allows Volvo to distance itself from combustion engines as the brand fully commits to EVs.
Volvo is cherished for its inline-five-cylinder engines that went into machines like the classic 850 T-5R and more modern V60. Now, these engines will pass on to Aurobay, along with all of the production capacity needed to make them, per Volvo:
Aurobay will initially be jointly owned by Volvo Cars and Geely Holding and as part of the creation of Aurobay, Volvo Cars will transfer all assets in its wholly owned subsidiary Powertrain Engineering Sweden, including its Skövde, Sweden-based engine plant including the related R&D team, along with its engine plant in China and other relevant assets to the joint venture in coming months.
Volvo says that Aurobay will make “complete powertrain solutions including next generation combustion engines, transmissions and hybrid solutions,” meaning it will actually produce hybrid drivetrains for Volvo and Geely, but it won’t supply Volvo with motors for its upcoming fully-electrified cars.
Volvo will handle all of the research and development for its BEVs, which, again, is one the big reasons Aurobay was created at all, as Volvo details:
The creation of the stand-alone joint venture and the transfer of assets allows Volvo Cars to focus fully on the development of its new range of all-electric premium cars in coming years. The company aims for 50 per cent of its global sales volume to consist of fully electric cars by 2025 while 50 per cent will be hybrids, with powertrains supplied by Aurobay. By 2030, it plans for every car it sells to be pure electric.
Another reason that Volvo and Geely say they created Aurobay is to supply other carmakers with combustion engines, though it’s unclear right now who those carmakers may be:
The new stand-alone business also has the ambition to supply customers outside of the Geely Holding Group, and aims to be a leading player in the supply of high-quality, low emission, cost-efficient powertrains solutions.
Aurobay’s plans to provide engines to other companies, as Volvo notes, could be a sign that the T5 will live on in some form or another, possibly in the engines that Aurobay makes after it takes over the Volvo plants.
It makes sense that the company is divesting itself of part of its legacy, because the transition Volvo plans is pretty ambitious. So, in that context, the Aurobay announcement is not really surprising, in that it helps side-step one of the bigger jumps towards Volvo’s permanent electrification. Volvo can get away with not making combustion engines, all while not divesting from them, either.