Flying auto company Terrafugia bought by China's Geely

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Chinese automaker Zhejiang Geely Holding Group (Geely) has been given the green light to buy U.S. flying auto start-up company Terrafugia. At the time, the idea of Volvo's parent company trying to build and sell flying cars had many people scratching their heads.

The Chinese auto giants, Geely, have announced that they have purchased flying vehicle developers, Terrafugia. And I have no doubt the number of itchy scalps will grow tenfold now that the deal is done.

Francis Kwok Sze-chi, managing director at Freeman Securities in Hong Kong, told NQN: "Demand for "flying cars" is promising in China where traffic congestions are chronic headaches".

Meanwhile, Terrafugia founder Carl Dietrich is staying on as the company's chief technology officer.

"Many carmakers, faced with challenges brought about by electric cars and autonomous driving, are making investments in frontier technologies, as the future is becoming more uncertain", he said.

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Its TF-X prototype is even more ambitious. The company said on Monday that it has agreed to the purchase of US startup Terrafugia that is making the world's first flying vehicle for practical use by 2019, pushing the Hong Kong-listed shares in its subsidiary to an all-time high. It features a 2-seat cabin and a foldable wing. This type of VTOL (pronounced vee-tol) technology is seen as fundamental to the creation of an aerial taxi service, as envisioned by Uber and others.

"This is an extremely exciting sector and we believe Terrafugia is ideally positioned to change the mobility as we now understand it and (we) herald the development of a new industry in doing so".

Chris Jaran, Terrafugia's newly appointed CEO, said the expansion of the company's R&D capabilities would be prioritized, according to Xinhuanet.

The price tag of the acquisition has not been disclosed, but Geely will acquire all outstanding shares and appoint three board members including Nathan Yu Ning, its vice president of global business. And in anticipation of the deal, Terrafugia has tripled the size of its engineering team over the past quarter. Of course, Terrafugia will benefit from the expertise and success in the automotive industry of the Geely Group.

Geely is the parent company of Swedish luxury brand Volvo Cars, along with the London Taxi Company.