Volvo Cars has released a statement saying it plans to set up a new joint venture technology company with its Chinese owners, Geely Holding.

Under the prosed new venture, the two would "share existing and future technology", with the Swedish automaker explaining that the deal would "deepen industrial synergies" and "provide the economies of scale" that would allow both parties to more rapidly develop next-generation electrified vehicle technology.

Under the signed memorandum of understanding, Volvo Cars, Geely Auto and Lynk & Co would share vehicle architecture and engine technologies via cross-licensing arrangements of technologies managed by the new joint venture. They will also co-operate more deeply 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 be 50/50 owned by Volvo Cars and Geely Holding and headquartered in China 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," said Håkan Samuelsson, president and chief executive of Volvo Cars.

"This planned collaboration will strengthen Volvo's ability to develop next generation electrified cars."

Of course, Volvo Cars and Geely already share some technology, most notably the Compact Modular Architecture (CMA) used by the Swedes for its soon-to-be-announced smaller range of 40 series cars as well as by Lynk & Co.

The statement added that the intellectual property rights for the technology to be shared would remain with the company that developed it, but that the technology itself would be available for use by all three, via licence agreements.

“Future modular vehicle architectures and other technology will be shared and developed based on cost sharing agreements. The company leading the development will own the technology and the other group companies will have full access to it through a licence, reducing overall development costs,” the statement read.

“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,” it added.

Separately, Volvo also announced that it would take a "significant minority shareholding" in Lynk & Co, reflecting the fact that the latter would benefit from the use of Volvo technology both now and in the future. Lynk & Co would thus be jointly owned by Geely Holding, Geely Auto and Volvo Cars.