Ford to Set Up European Hybrid Centre in Sweden, Volvo Invests US$1.36 bil. in Fuel Economy Research

Ford Unveils Fresh Investments in Sweden

Ford has announced that a new European hybrid development centre will be set up in Gothenburg (Sweden) while investments of 10 billion Swedish krona (US$1.36 billion) will be made in fuel economy and environmental research by Volvo Cars.

New Gothenburg Centre to Lead Hybrid Research

Led by Volvo, the new Gothenburg facility will have overall responsibility for the application of hybrid systems into Volvo vehicles globally, Ford said in a statement issued this morning. In addition, the new facility will lead the development of hybrids for Ford of Europe and Ford's Premier Automotive Group (PAG) brands.

The Gothenburg centre forms part of what Ford calls its "global initiative to speed the introduction of more fuel-efficient vehicles". Initially set up with 20 leading engineers from various Ford Group divisions, the Gothenburg team will work in cooperation with Ford's hybrid development team in Detroit, Michigan, to create synergies and to boost economies of scale. "We are very pleased that Ford Motor Company has decided to establish a development centre for hybrid technology in Gothenburg", Volvo chief Fredrik Arp commented on the news, which strengthens Volvo's position within the Ford Group.

Volvo Places Bets on Fuel Economy, Invests US$1.36 Billion

In addition to the setting up of the new facility, the companies also announced that Volvo Cars will invest around US$1.36 billion in environmental research and development (R&D) with the aim to reduce total fuel economy and tailpipe emissions.

The investment initiative will focus primarily on the development of cleaner, more efficient diesel engines, hybrids and alternative fuel vehicles, Volvo said in a joint statement, adding that the use of light materials like magnesium, aluminium and lighter high-strength steel would also be studied, along with the introduction of smaller vehicles. "The hybrid cars of tomorrow will be more sophisticated and much further developed compared with what we see on the road today", Arp said, adding that it was likely that high-performance hybrids running on diesels and renewable fuels would follow.

Outlook and Implications

The new investments come to strengthen Volvo's role within the Ford Group. Strict safety and environmental regulations in Sweden have facilitated Volvo's specialisation into one of the global industry leaders in both fields, with Ford looking to bank on this know-how. Further details regarding plans to introduce hybrids in the line-ups of Ford's PAG and European brands have not yet been revealed, but the announcement came in the wake of Ford chief Bill Ford's comments that the company was planning to focus its hybrid efforts increasingly in Europe after abandoning the goal of building 250,000 hybrids per annum in the United States.

The investments come as alternative-fuel vehicles (AFVs) have emerged as perhaps the hottest topic in the automotive industry. The high cost of fossil fuels, rising overall demand, environmental concerns and geopolitical supply risks have all encouraged efforts to develop alternative solutions for transportation needs, with the current consensus increasingly pointing in the direction of multiple energy sources. When admitting that its hybrid goals would not be met in the U.S. market, Bill Ford earlier this week said that the company would instead be looking into a wider range of alternative fuel solutions to boost fuel economy. Although the Gothenburg site is initially being set up as a hybrid development centre, its focus is likely to shift towards a range of solutions as well – one of which will be hybrid systems – thanks to the US$1.36 billion investments in environmental research.