First, the companies’ powertrain operations will be combined in a new company, focused on developing next-generation internal combustion and hybrid engines. Expected to be operational by this year, it will also develop transmissions and dual-motor hybrid systems for use by both Geely and Volvo.

Volvo, through Zenseact will take the helm in the development of autonomous drive technologies for the two companies. However, in terms of sourcing, they are planning to jointly source batteries, electric motors, and connectivity solutions for improved economies of scale.

Volvo and Geely will also share the SEA and SPA2 architectures which will hasten the rollout (and improve the affordability) of electric vehicles. The sharing of platforms will also expand to other brands such as Lynk & Co and Polestar.

Speaking about Lynk & Co, Volvo Cars will use its existing distribution and service network to expand the presence of their jointly-owned brand globally.

The collaboration agreement has been welcomed by Li Shufu, Chairman of Geely Holding, the parent company of Volvo Cars and the largest shareholder in Geely Auto.

“As shareholders and portfolio-managers of both wholly owned and listed companies, Geely Holding sees significant benefits from deeper partnerships and alliances while maintaining independence,” said Li Shufu. “We are encouraged by the potential synergies and growth opportunities created by this collaboration, which will create two even stronger globally competitive companies in the rapidly changing world of automotive technology and new mobility services.”