Volvo Bus Corp. is entering a joint venture with China’s Shanghai Automotive Investment Corp. aiming to manufacture drivetrain systems for hybrid fuel and electric buses. The venture — Shanghai Green Bus Drive System Co., based in Shanghai, China — will be capitalized at an estimated $15.3 million, with Volvo Bus taking a 40% stake and SAIC holding 60%.

According to a release, the partners are banking on the Chinese government’s commitment to develop “the strategic new energy vehicle industry.” Chinese officials are promoting “sustainable” automotive designs and production, including a supply chain to support alternative fuel vehicle manufacturing.

SAIC Motors is one of China’s Big Five automotive groups and the largest retailer of vehicles in that country with 3.56 million units sold in 2010. SAIC already has a technological roadmap for developing alternative-energy vehicles, which will calls for increasing use of electric vehicles followed by fuel-cell vehicles, while supporting more manufacturing of hybrid and pure-electric vehicles.

Volvo Bus is one of the world’s largest manufacturer of buses and coaches, including complete vehicles, chassis, and bodies, as well as metropolitan transport system designs. It is a business unit of Sweden’s AB Volvo, which builds builder of commercial vehicles and construction equipment and supplies marine and industrial drives and aerospace components. Serial production of the Volvo 7700 Hybrid and the double-decker Volvo B5L Hybrid buses has begun, with orders placed by a number of bus operators worldwide.

Volvo also has a long-term technological roadmap for developing new energy vehicles, including various hybrid vehicle designs.

The two partners have been building urban buses in China for the past 10 years through a joint-venture called Sunwin Bus. It produced over 300 alternative-fuel buses for last year’s Shanghai World Expo. Their new venture will manufacture alternative-fuel drivetrain systems, including testing and assembling the systems, and prototype manufacturing.

Shanghai Green Bus Drive System plans a new plant to be in production by late this year, though regulatory approval for the project has not been secured.
 

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