Ford Joins Up With Volvo to Meet European Environmental Rules

(Bloomberg) -- Ford Motor Co., seeking to avoid costly fines for falling short of European environmental regulations, is joining with Volvo Cars AB to comply with the rules limiting emissions from their vehicles.

Volvo, part of China’s Zhejiang Geely Holding Group Co., and its affiliate Polestar have overachieved in meeting the regulations and will sell its surplus to Ford for an undisclosed sum, the Swedish automaker said Thursday in a statement. Volvo said it will use the revenue it receives from Ford to invest in green technology projects.

Ford had to seek the help of another manufacturer to meet the stringent new rules because it fell out of compliance after being forced to recall 20,500 plug-in hybrid Kuga SUVs when seven caught fire while charging.

Ford said Wednesday it has already spent about $400 million on the recall and pooling with another company to meet the regulations. The automaker blamed its third-quarter $440 million loss in Europe on the Kuga recall.

“Had it not been for the Kuga issue, Europe would have been profitable for the third quarter,” John Lawler, Ford’s chief financial officer, said on a call with analysts. The company expects to spend as much as another $200 million on recall-related costs this quarter, he said.

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