Westport & Volvo Group Sign Letter of Intent to Establish Joint Venture to Reduce CO2 Emissions From Long-Haul Transport

VANCOUVER (July 19, 2023) — Volvo Group and Westport Fuel Systems Inc., a supplier of advanced alternative fuel delivery systems and components for the global transportation industry, have signed a non-binding letter of intent to establish a joint venture to accelerate the commercialization and global adoption of Westport’s HPDI fuel system technology for long-haul and off-road applications. Volvo and Westport share the vision of creating sustainable transport solutions to accelerate the decarbonization efforts of global trucking, engine and equipment manufacturers for their customers and society.

Westport’s HPDI fuel system is a high-performance solution supporting significant carbon reductions in hard to abate sectors like heavy-duty and off-road mobility. HPDI enables the world’s trucking and off-road equipment manufacturers to address the challenges of meeting the regulatory requirements of Euro 7 and the U.S. Environmental Protection Agency while offering end users affordable options that are powered by carbon neutral fuels like biogas, zero carbon fuels like green hydrogen and other renewable fuels. While Volvo will be a key customer of the joint venture, the joint venture’s mandate will be to enhance commercialization of HPDI through the addition of new trucking and equipment manufacturers as customers.

Westport will contribute current HPDI assets and activities including related fixed assets, intellectual property and business into the joint venture. Volvo will acquire a 45% interest in the joint venture for the sum of approximately $28 million (plus up to an additional $45 million depending on the performance of the joint venture.

Volvo’s ambition is to reach net-zero greenhouse gas emission-enabled products, solutions and services by 2040. Volvo believes the future will demand diverse propulsion solutions for diverse applications to meet customers’ needs and environmental demands. Volvo advocates for a three-pronged approach: battery-electric, fuel-cell electric and internal combustion engines.

“Decarbonization 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 utilize existing manufacturing infrastructure,” said David Johnson, chief executive officer at 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.