The two companies plan to utilise their respective expertise to further the development of flying cars, with Terrafugia already having tripled its US engineering team as part of an expansion ahead of the takeover.
Geely has committed to investing heavily in the Massachusetts-based firm, which wants to bring its first flying car to market in 2019, and the world's first VTOL (vertical take-off and landing) flying car by 2025.
Terrafugia will remain headquartered in the US under its new Chinese owners, while benefitting from the Zhejiang Geely group's investment, not to mention its experience within the automotive industry.
"The team at Terrafugia have been at the forefront of believing in and realizing the vision for a flying car and creating the ultimate mobility solution," said Li Shufu, Zhejiang Geely founder and chairman.
"Our investment in the company reflects our shared belief in their vision and we are committed to extending our full support to Terrafugia, leveraging the synergies provided by our international operations and track record of innovation, to make the flying car a reality."
Meanwhile, founder of Terrafugia, Carl Dietrich, said: "We started Terrafugia with a vision to change the future of transportation with practical flying cars that enable a new dimension of personal freedom".
"Now as part of Geely Holding Group I am confident that we can reach that vision and subsequent commercial success by utilising the Group's shared global synergy," he added.
Pictured is the Terrafugia TF-X, a fully-electric flying car concept that is capable of vertical takeoff and landing. The company has also developed 'The Transition', pitched as the "first practical flying car". Two full-scale prototypes have been put to the test, making it the most likely vehicle to be introduced in 2019.
Above: Geely MPV concept
Geely is the parent company of Swedish luxury brand Volvo Cars, along with the London Taxi Company. The Geely Holding Group sold a combined 1.3 million vehicles in 2016, and co-developed the Compact Modular Architecture (CMA) with Volvo – which will underpin the Swedish manufacturer's new 40-Series range, starting with the XC40 SUV when it launches in Australia next year.