Swedish automaker Volvo and China's Geely intend to merge their existing combustion engine operations into a stand-alone business as they seek to develop new combustion and hybrid engines.
Geely owns 50% of Volvo and the duo's plan is for Volvo to focus on developing its all-electric range of cars. The Scandinavian car company is building an entirely electrified product range.
By 2025, it expects half its global sales to be fully electric and the other half hybrid, supplied by the new unit.
"Hybrid cars need the best internal combustion engines. This new unit will have the resources, scale, and expertise to develop these powertrains cost-efficiently," said Håkan Samuelsson, Volvo Cars’ President and Chief Executive.
Volvo believes the electrification of the automotive industry will not happen overnight and that there will be a strong demand for hybrid powertrains.
For Geely, the planned new entity means technologically advanced and efficient combustion engines and hybrid powertrains would be available to Geely Auto, Proton, Lotus, LEVC and LYNK & CO. The planned new stand-alone business can also supply third-party manufacturers, providing possible growth opportunities.