According to foreign media reports, Volvo Automobile Group has reached an agreement with parent company Geely Holdings Group to wholly acquire the parent company's Chinese road and bridge plant.
According to a previous agreement between the two sides, the transfer means that Volvo will fully own the plant within the next two years. The plant will continue to produce Volvo XC40, all-electric XC40 Recharge and Polestar 2 models.
The plant's capacity will be entirely controlled by Volvo, which will further consolidate Volvo's position in China's largest car market. In addition, the transfer will clarify the ownership structure of Volvo and Geely Holdings.
Since its completion in 2017, the road and bridge plant has been owned by Geely Holdings and operated by Volvo. Since Volvo is already operating the plant, the deal will not change the way it operates. The plant's 2600 employees, as well as production and related support functions, will be transferred from Geely Holdings to Volvo.
According to the naming convention of Volvo's other factories in China, the Luqiao plant will be renamed the Taizhou plant. The factory will be named according to the name of the city where the factory is located, not the name of the region.
Javier Varela, director of engineering and operations at the Taizhou plant, said, "as the Taizhou plant is now fully used to produce Volvo cars, the transfer of the Taizhou plant is a sensible and reasonable move for both sides. The Taizhou plant produced our first pure electric vehicle, the Polestar 2, which will continue to help us achieve our goal of becoming a global leader in high-end electric vehicles, which is symbolic. "
The Taizhou plant will further promote the development of Volvo in China, which is also an example of the successful cooperation between Volvo and Geely Holdings. The models currently produced at the plant are based on the infrastructure (CMA), a platform jointly developed by Volvo and Geely Holdings.
Geely Holdings and Volvo have been trying to optimize the collaboration and operating structure within the group. Before the Taizhou plant was transferred, the powertrain businesses of the two companies merged into a new independent company, Aurobay. In July, the two companies reached an agreement that Volvo would acquire an additional 50 per cent stake in the joint venture with Geely in China.
