Volvo is to set up a new technology joint venture with Chinese car group Geely to accelerate plans to develop cars fully or partly based on electric motors.

Li Shufu, chairman of Geely Holding.

Earlier this month, the Swedish carmaker announced that it is to launch five fully electric cars – including two high-performance models – by 2021 in line with its plans to use electric motors in all cars from 2019.

Now, Volvo has signed a memorandum of understanding with Geely Auto and electric car brand Lynk & Co – all of which are controlled by the Geely Holding Chinese car group – to develop a joint venture that will enable the firms to share vehicle architecture and engine technologies via cross-licensing arrangements of technologies, also helping to cut procurement costs.

The collaboration is also expected to branch into electrified vehicle components such as battery cells, e-motors and charging systems.

The new joint venture will be 50/50 owned by Volvo Cars and Geely Holding and be headquartered in China with a subsidiary in Gothenburg, Sweden.

In addition, Volvo is to take a significant minority shareholding in Lynk & Co, with the company saying the stake reflects the fact that Lynk & Co will benefit from the use of Volvo technology both now and in the future.

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.”

The transactions are subject to definitive agreements and relevant authority approvals.