Swedish automaker Volvo Cars, which has embarked on an aggressive electrification strategy, has announced plans for setting up a new joint venture technology company with Geely Holding, the Chinese carmaker, for sharing existing and future technologies. It will also pick up a minor stake in ride-sharing company Lynk.

The new joint venture (JV) between the carmakers aims to further deepen industrial synergies while providing economies of scale that will further allow them to rapidly develop the next-generation of electrified vehicle technology.

According to the MoU signed today, Volvo Cars, Geely Auto and Lynk & Co will share vehicle architecture and engine technologies through cross-licensing arrangements of technologies managed by the new joint venture. They will also cooperate by commonly sourcing components and cutting procurement costs.

Volvo Cars, Geely Auto and Lynk & CO are controlled by Geely Holding, the Chinese car group. The new joint venture will see Volvo cars and Geely Holding having a 50-50 stake that will be headquartered in China along with a subsidiary in Gothenburg, Sweden.

“Partnerships to share know-how and technologies are common practice in the automotive industry. This is the model we are adopting. This planned collaboration will strengthen Volvo’s ability to develop next generation electrified cars.” said Hakan Samuelsson, president and chief executive, Volvo.

Volvo Cars and Geely are already sharing technology, most notably in the Compact Modular Architecture (CMA) that is being used by Volvo Cars for its soon-to-be-announced smaller range of 40 series cars and by Lynk & Co.

Furthermore the MoU states that the intellectual property rights for the technology to be shared will remain with the company that has developed it, but the technology itself will be available for use by Volvo, Geely Auto and Lynk & Co, via license agreements. This will help in reduction of the costs for a partner to develop the technology all by itself.

It is expected that the collaboration will extend in future to also cover electrified vehicle components such as battery cells, e-motors and charging systems in order to maximise synergies across the group.

Separately, it is also announced today that Volvo is to take a significant minority shareholding in Lynk & Co. This stake reflects the fact that Lynk & Co will benefit from the use of Volvo technology both now and in the future. Lynk & Co will be jointly owned by Geely Holding, Geely Auto and Volvo Cars.

Li Shufu, chairman of Geely Holding said, “We will unlock significant benefits across our portfolio by sharing both technologies and next-generation vehicle architectures. I am confident these synergies can be achieved while preserving the separate identities and strategic autonomy of our different automotive brands.”

Also read: Every new Volvo car from 2019 to be electric