Westport Fuel Systems Inc. ( WPRT ) shares are surging today after the company disclosed signing an investment agreement to create the previously announced joint venture with Volvo AB ( VOLAF ) (OTC:VOLVF).

The move reflects the company’s aim to accelerate the commercialization and global adoption of its HPDI fuel system technology for long-haul and off-road applications.

High Pressure Direct Injection (HPDI) is a fuel system technology that can be applied in vehicles with internal combustion engines to replace greenhouse gas-emitting fuels, like diesel, with carbon-neutral or zero-carbon fuels like biogas or hydrogen.

In July 2023, the company signed a Letter of Intent with Volvo ( VOLAF ) to establish a joint venture to reduce CO2 emissions from long-haul transport.

As earlier announced, Westport will contribute 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 about $28 million (payable upon closing), along with an additional $45 million as an earn-out, depending on the subsequent performance of the JV.

Westport expects the JV to become operational following the formal closing, which is scheduled for the second quarter of 2024, subject to certain closing conditions. 

“We are excited to execute this agreement and build on our success with the Volvo Group and our HPDI™ technology. 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,” said Dan Sceli, CEO of Westport.

In January, Westport announced Dan Sceli as the new Chief Executive Officer and Board of Directors member, effective January 16, 2024.

Price Action: WPRT shares are up 16.9% at $6.50 on the last check Monday.