China’s Geely Holding, the company that owns Volvo Cars and Chinese vehicle brands Geely Auto, Lynk & Co., deepens its ties with the Swedish automaker by setting up a new joint venture that will allow both companies to share technologies and even assist each other in the development of electric vehicles.

Currently, Volvo and Geely already have an existing agreement allowing both to share the Compact Modular Architecture (CMA). Volvo Cars will use it for and upcoming smaller range of 40 series cars and also by Lynk & Co.

The new Memorandum of Understanding signed by Volvo Cars, Geely Auto and Lynk & Co. states that all three companies will share vehicle architecture and engine technologies via cross licensing arrangements while also working on a cooperation in sourcing components and cutting procurement costs.

Intellectual property rights for the developed technology will remain with the company that came up with it but the product may be shared between Volvo, Geely Auto and Lynk & Co, via license agreements.

Volvo Cars and Geely Holding will own 50-percent each of the new joint venture that will be headquartered in China with a subsidiary in Gotherburg, Sweden.

Part of the agreement also provides for Volvo Cars to have a stake in Geely's newest car company Lynk & Co.

“Partnerships to share know-how and technologies are common practice in the automotive industry. This is the model we are adopting. This planned collaboration will strengthen Volvo’s ability to develop next generation electrified cars,” said Håkan Samuelsson, president and chief executive.

Volvo plans to phase out internal combustion engines and sell only hybrid or purely electrified vehicles by 2019.

“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.”