The Swedish automaker and its Chinese parent company will combine their ICE operations, which will produce engines for all member brands.
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Volvo and Geely, its Chinese parent, have announced they intend to merge their internal-combustion engine (ICE) operations in the near future.

When Volvo and Geely's engine operations are merged, the new division will supply internal combustion engines and hybrid powertrains to all members of the Geely family, which also includes Lotus, Lynk & Co and LEVC, the maker of London's black taxi cabs.

The new engine operation will also make their drivetrains available to other manufacturers. It's not clear if any discussions have taken place or if any other automakers are interested, but joint development and sharing of powertrains and platforms has increased in the past decade as development costs have skyrocketed.

Neither company has gone into any of the specifics about how the new engine division will operate, such as who it will be lead by, where it will be headquartered and how responsibilities will be divided up.

As part of the first step, both Volvo and Geely will carve out their ICE operations into distinct entities before merging them into one organisation serving the entire conglomerate.

Geely estimates it has 5000 employees working on combustion engine research, development and manufacturing, as well as in related IT and finance support roles, with roughly 3000 people in Volvo engaged in similar roles.

According to companies, "detailed plans of the new business are under development", with timing for the actual merger to be determined by union negotiations and regulatory approvals. No job loses are anticipated from this merger.

Volvo says it believes the shift to full electrification will be a "gradual process" and, as such, there will be long term demand for hybrid drivetrains.

The Swedish automaker estimates by 2025 half of its sales will come from fully electric models, with the other half consisting of hybrid vehicles.