Geely Spending $11 Billion To Develop Next Generation Volvos

Posted Dec 3, 2012

A couple of years ago, Geely bought Volvo for $1.5 billion from Ford.  Geely gained ownership of Volvo’s platforms and a licensing contract from Ford as part of the acquisition.  The licensing contract has limitations and the platforms are getting older.  Geely is now going to invest as much as $11 billion until 2015 into a development program for the next generation Volvos according to Reuters.

The main research and development of the $11 billion investment will be performed in Sweden.  According to Volve, this amounts to “one of Sweden’s largest ever industrial investments.”

The two programs in the investment include Scalable Product Architecture (SPA) and Volvo Engine Architecture (VEA).  VEA will focus on a new four-cylinder fuel-efficient engine family.  SPA will be a variation on modular systems that are generally pursued by European and Japanese automotive companies.

Volvo said that SPA consists “of shared modules and scalable systems and components, all manufactured in a flexible production system.”

“SPA makes us technologically independent, without any link whatsoever to our previous owner. The new architecture covers about two-thirds of our total sales volume. With about 40 percent of all components shared by all car models irrespective of size, we will benefit from economies of scale,” stated Volvo R&D chief Peter Mertens.

The first car based on the new architecture will be the Volvo XC90, which is planned for 2014.  Currently there is no Volvo production taking place in China.