Volvo Car Corp. has reached an agreement with its Chinese parent Zhejiang Geely Holding Group to establish a joint venture to take over its powertrain operations.
The deal will allow it to concentrate on developing a new range of EVs, Volvo said in statement Thursday.
In the coming month, it will merge all its powertrain operations -- including engine plants in Sweden and China -- into the new company, the Swedish automaker said.
The JV company, named Aurobay, will initially develop powertrains within the Volvo and Geely groups, but expects also to supply customers outside the group in the future.
"The new stand-alone business also has the ambition to supply customers outside of the Geely Holding Group, and aims to be a leading player in the supply of high-quality, low emission, cost-efficient powertrain solutions," the Volvo statement said.
Volvo is targeting half of its global sales volume to come from EVs in 2025, with the other half from hybrid vehicles with powertrains supplied by Aurobay. It expects to sell only EVs starting 2030.