Volvo’s relaunch of its independent IPO: Will the ‘Geely-Volvo integration’ encounter new uncertainties?

It is unsurprising that Volvo seeks financing. As the automotive industry advances toward the ‘new four modernizations’—electrification, connectivity, intelligence, and sharing—major automakers are ramping up investments in emerging technologies. In June 2018, Volvo unveiled its ten-year mid-term plan, targeting that by then half of its annual sales volume would consist of battery-electric vehicles and one-third would be autonomous vehicles. Achieving these goals naturally demands substantial capital investment. However, Volvo’s initial IPO plan ultimately fizzled out. Reports indicated that several valuation firms appraised Volvo at $16–30 billion, whereas Geely Holding’s senior management valued the company at $30–40 billion—a significant gap. From ‘Merger’ to ‘Collaboration’ On the other hand, from the slogan ‘Volvo is Volvo’ to an increasing number of new Geely-branded vehicles being built on shared platforms with Volvo, technological integration between Geely Auto and Volvo continues to deepen. According to Geely Holding’s original plan, following this technological convergence, Geely Auto and Volvo would gradually restructure their businesses and ultimately merge into a single entity. Post-merger, Volvo’s assets would be incorporated into Geely Auto’s Hong Kong-listed company, thereby connecting it to global capital markets. Yet this merger process encountered numerous setbacks. Samuelsson revealed in a media interview that a full-scale merger would trigger more organizational conflicts and power struggles. In June 2020, Geely Auto—listed on the Hong Kong Stock Exchange—announced its return to China’s STAR Market (Sci-Tech Innovation Board) in Shanghai; shortly thereafter, Volvo announced the suspension of the merger plan. After a year of deliberations, in February this year, Geely Auto and Volvo jointly announced a ‘best-possible merger solution.’ Under the new agreement, collaboration will focus primarily on forward-looking technologies—including powertrains, electrified vehicle systems (‘three-electric’ technologies), and high-level autonomous driving—while both companies retain their existing equity structures independently. Against the backdrop of unchanged ownership structures, Volvo’s plan for an independent IPO has recently been revived. A New Win-Win? Clearly, Volvo’s independent listing would inevitably dilute Geely Holding’s equity stake. Yet many industry insiders view Volvo’s equity diversification not as wholly detrimental to Geely Holding, but rather as potentially forging a new win-win scenario. Automotive market analyst Ren Wanfu argues that although Volvo’s sales and profitability have grown steadily in recent years, it still faces mounting pressure from the transition to electrification. Leveraging capital markets to accelerate this transformation serves the interests of both parties. Meanwhile, though Geely Holding’s shareholding in Volvo would decline, it would not lose control over Volvo, leaving existing cooperative arrangements largely unaffected. Indeed, amid the broader industry-wide push toward the ‘new four modernizations,’ both Volvo and Geely Auto must significantly increase capital expenditures—impacting their financial health. Since 2010, Geely Holding alone has invested as much as $11 billion in Volvo’s Scalable Product Architecture (SPA); likewise, the Lynk & Co joint venture—established by Geely Auto and Volvo—has consumed substantial financial resources. Although Geely ranks as China’s largest private automaker, its financial situation is far from worry-free.

Geely’s Dilemma | The ‘Geely-Volvo Split’

An Conghui, President of Geely Holding Group and CEO & President of Geely Auto Group, has repeatedly stated that Chinese-brand automakers do not lack vehicle models—they lack ‘star models.’ Only through persistent, generational iteration can such models build influence and reputation. However, excessively complex product lineups and overly similar pricing strategies easily lead to internal competition during sales, causing inefficiency and hindering the creation of breakout products and strong brands. Overlapping price segments also strain the stability of Geely’s pricing system. For instance, the Emgrand model evolved from a single vehicle into the ‘Emgrand Family,’ encompassing the Emgrand, Emgrand GL, and Emgrand GS—covering multiple niche markets and boosting market share, effectively becoming Geely’s sales anchor. This maturing Emgrand Family now stands poised to become Geely Auto’s ‘star model.’ Yet the long-serving Emgrand, confronted by newer entrants like the Binrui and ICON, has ‘passively’ entered a turning point marked by declining core competitiveness. As China’s longest-running sedan model among domestic automotive brands, the Emgrand has spanned a decade and is nearing 3 million cumulative sales. Its success was no easy feat. Yet while launching a successful individual model is relatively straightforward, building a successful family of models is exceedingly difficult. Balancing the Emgrand Family’s various members—and avoiding internal cannibalization—is Geely’s most thorny challenge in cultivating this lineup. Data from March shows the Emgrand dropped out of the top ten best-selling sedans; the Lavida and Sylphy reclaimed the top two spots, and all ten positions were occupied by joint-venture brands—an unmistakable signal. The Emgrand’s crisis reflects Geely’s broader dilemma—and poses a critical test for Geely’s 2-million-unit sales ecosystem. Moreover, Lynk & Co rushed to launch multiple products before solidifying its premium brand image, aiming for greater market share. Yet due to overlapping launch timelines and order backlogs, internal sales conversion created a heavy lesson for both Geely and Lynk & Co. Every grand ambition requires dazzling global star vehicles to illuminate its path. Judged by this standard, Geely must extend the Emgrand’s lifecycle significantly. Meanwhile, Lynk & Co—born global—still lacks any single model selling over 10,000 units monthly; its target of 1 million cumulative sales remains a long road ahead. In 2019, Geely’s total annual sales reached 1.362 million units—a 9.3% year-on-year decline. Its ‘sea-of-models’ strategy began showing signs of diminishing returns: its stock price halved from its peak, per-vehicle profit plunged from RMB 8,400 to RMB 6,000, and mainstream models lacked standout appeal. These converging factors collectively weakened Geely Auto’s market competitiveness. From internal product cannibalization to tensions across upstream and downstream supply chains, and from surging R&D expenditures to immense profit pressures—these nascent risks, if left unaddressed, could at best delay growth and at worst trigger systemic collapse. Indeed, the series of hidden risks exposed in 2018 stemmed partly from imbalances arising from Geely’s excessively rapid expansion relative to its overall organizational capacity. Although Geely Auto claims it has shifted focus—from pursuing ‘speed’ to pursuing ‘high-quality development’—at its 2020 communication conference, the company reaffirmed its multi-brand, multi-product-line strategy, placing ‘launching multiple new products’ first among pillars expected to drive future performance gains.

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