Zhejiang Geely Holding Group has just gone where no Chinese automaker has gone before: buying a major global car brand. Under an agreement announced on Sundayand slated to close in the third quarter of 2010, Geely — a company known for its low-cost compacts — will buy the loss-making luxury brand Volvo for $1.8 billion from Ford Motor.

In a statement about the deal, Geely noted that the board and management of Volvo, which will operate as a separate unit based in Sweden, “will have a mandate to develop Volvo Cars’ leadership in safety and clean environmental technologies.” In terms of technology for greener cars, Volvo’s electric vehicle initiatives have “hardly been at the vanguard of the industry,” as Lux Research senior analyst Jacob Grose put it to us today. So how does Geely’s acquisition of the tech and brand play intoChina’s larger role in the nascent electric vehicle market?
......

Opening Doors for EnerDel?
Despite its relatively conservative approach to electric vehicles so far, Volvo has laid out plans to launch a 50-car test fleet of its first all-electric model, the electric C30 (pictured), in early 2011. And it signed on EnerDel, the battery making subsidiary of Ener1, to supply lithium-ion batteries for the initial run (check out our video interview with Ener1 CEO Charles Gassenheimer.)

This week’s deal comes on the heels of another agreement in which an overseas automaker decided to buy one of the Big Three’s loss-making brands — Dutch specialty car maker Spyker agreed in January to buy struggling General Motors subsidiary Saab for $74 million.

Battery maker Boston-Power at the time had just joined with Saab and several partners in Sweden for the first demonstration of its vehicle batteries, and Saab’s shaky status cast uncertainty around the project. By February, however, Boston-Power CEO Christina Lampe-Onnerud told us the project was plowing “full steam ahead” and the startup was “thrilled with Spyker coming in.”
......

China’s Electric Transition
That high-end segment, which is Volvo’s niche, could hold sizable opportunity in China in coming years. According to forecasts cited by the LA Times today, China’s luxury vehicle segment is on track to double in size within five years. And Frost & Sullivan anticipates China’s vehicle fleet will begin a minimum 10-year transition to plug-in hybrids and battery-electric vehicles as early as this year...... (see attachment for details)

http://earth2tech.com/2010/03/29/how-the-volvo-geely-deal-plugs-into-the-green-car-race/