Proposed new business will allow Volvo to focus on the development of all-electric vehicles.

Volvo Cars and Geely have announced plans to merge their existing internal combustion engine (ICE) operations into a stand-alone business that will focus on developing next generation combustion engines and hybrid powertrains, while allowing Volvo to focus on all-electric vehicles.

For Geely, the planned new entity translates into a regular supply of combustion engines and hybrid powertrains for the many brands in the Geely family, including Geely Auto, Proton, Lotus, LEVC and LYNK & CO. The planned new stand-alone business can also supply third party manufacturers.

“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.