Volvo Group and Westport Fuel Systems have signed a non-binding letter of intent to create a joint venture focused on advancing the commercialisation and global adoption of Westport’s HPDI fuel system technology for long-haul and off-road applications.
Both companies share the vision of developing sustainable transport solutions to accelerate the decarbonisation efforts of global trucking, engine, and equipment manufacturers, benefiting customers and society as a whole.
The HPDI fuel system allows trucking and off-road equipment manufacturers to meet stringent regulatory requirements like Euro 7 and US EPA standards while offering end-users affordable options powered by carbon-neutral fuels such as biogas, zero-carbon fuels like green hydrogen, and other renewable fuels. While Volvo will be a key customer in the joint venture, the primary goal is to attract additional trucking and equipment manufacturers as customers to promote HPDI’s commercialisation.
Westport will contribute its current HPDI assets, including intellectual property and related fixed assets, to the joint venture. Volvo, on the other hand, will acquire a 45% stake in the joint venture for approximately US$28 million, with the potential for an additional US$45 million based on the joint venture’s performance.
Volvo’s overarching objective is to achieve net-zero greenhouse gas emissions for its products, solutions, and services by 2040. To meet the diverse needs and environmental demands of the future, Volvo advocates for a three-pronged approach comprising battery-electric, fuel-cell electric, and internal combustion engine solutions.
“Decarbonisation with internal combustion engines running on renewable fuels, especially with HPDI, plays an important part in sustainable solutions. 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 (Liquefied Biogas) applications here and now and is a potential avenue for hydrogen,” said Lars Stenqvist, Chief Technology Officer of Volvo.
“Westport is advancing fuel system solutions to help our customers affordably address the most pressing challenge of carbon reduction, while continuing to utilise existing manufacturing infrastructure,” said David Johnson, Chief Executive Officer, Westport. “The joint venture with Volvo is a natural extension of both companies’ commitment to accelerating global carbon reduction and we are proud to partner with such a bold supporter of the future of the internal combustion engine. Combining our expertise strengthens HPDI’s position in the market and underscores Westport’s commitment to developing affordable fuel system technology that supports significant CO2 reductions in hard to abate sectors like heavy-duty transport and off-road applications, including a pathway to power equipment with zero carbon fuels like hydrogen.”
Completion of the joint venture is conditional on the successful negotiations and execution of a definitive investment agreement, joint venture agreement, supply agreement and development agreement. The joint venture is expected to launch in the first half of 2024.