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Volvo and Geely to jointly develop software for smart cars
Volvo’s passenger car business is taken over by Chinese giant Geely Holding Group in 2021. The head of the Chinese conglomerate Shen Zi Yu founded ECARX to focus on smart car technology in 2021 and is now forming a joint venture with Volvo Cars to do the same.
Image source: Reuters
ECARX’s European headquarters have been based in Volvo’s homeland of Gothenburg since last year, and will also host a joint venture with Volvo Cars to focus on software development for smart cars. The corresponding software solutions can be used not only in Volvo cars, but also in the products of Chinese brands, which Geely produces with enviable tenacity. Optimizing costs and generating new revenue streams are among the goals of creating a new joint venture.
Presumably, Geely and Volvo are inspired by statements from Tesla and NVIDIA that predict software revenues will turn into a stable source of revenue for automakers. During the period of the car’s operation, the owner’s expenses for updating the software, according to representatives of American companies, can be equal to the initial price of the car, measured in tens of thousands of dollars. Software updates can open up new functionality, especially in light of the automation of the control process. Since the Volvo brand pays special attention to traffic safety, the «court» developer of profile software will definitely not interfere with it. ECARX has been actively attracting investments in recent months and now claims that its capitalization exceeds $ 2 billion.