Volvo, Westport JV agreement signed

Westport’s HPDI fuel system technology can be applied in vehicles with internal combustion engines to replace diesel and other greenhouse gas-emitting fuels. (Photo: Volvo Group)

In according with a previously announced Letter of Intent, the Volvo Group and Westport Fuel Systems Inc. have signed an investment agreement to establish a joint venture to accelerate the commercialization and global adoption of Westport’s High Pressure Direct Injection (HPDI) fuel system technology for long-haul and off-road applications.

Westport will contribute certain HPDI assets and opportunities, including related fixed assets, intellectual property and business, into the JV. Volvo Group will acquire a 45% interest in the JV for the sum of approximately US$28 million, payable upon closing, plus up to an additional US$45 million as an earn-out, depending on the subsequent performance of the JV.

The HPDI fuel system is a complete system offering OEMs the flexibility to differentiate their biogas, natural gas, hydrogen and other fuel product lines while also maintaining maximum commonality with their conventional products, Westport stated. The technology can be applied in vehicles with internal combustion engines to replace diesel and other greenhouse gas-emitting fuels.

“Decarbonization with internal combustion engines running on renewable fuels, especially with HPDI, plays an important part in sustainable solutions,” said Lars Stenqvist, chief technology officer, Volvo Group. “HPDI has been on the road in Volvo trucks for over five years and is a proven technology that allows customers to significantly reduce CO2 emissions in LBG (Liquified Biogas) applications here and now and is a potential avenue for hydrogen.”

Dan Sceli, CEO of Westport Fuel Systems Inc., said the company is excited to execute the JV agreement and build on the success HPDI has already seen with the Volvo Group. “We are motivated to keep innovating and investing in strong business relationships with leading organizations that share our goals, of which Volvo Group is certainly one,” he stated. “Powered by our shared vision for a cleaner tomorrow, we look forward to further collaboration and providing real solutions to decarbonize the long-haul and off-road transport sectors.”

The closing of the JV is subject to certain closing conditions, including regulatory and government approvals. It is anticipated that the JV will become operational in the second quarter of 2024.