In not so thrilling news the Chinese car maker Geely which owns Volvo has announced it will form a separate company specifically to build engines.

Remember Geely? It briefly put in an appearance here in 2010 when Western Australian importer John Hughes launched with the Geely MK hatch.

At the time it had the distinction of being the cheapest car in Australia and was to be followed by the larger EC7 sedan, but it was canned with the introduction of stricter safety standards.

Why is this so interesting? Because the deal frees up Volvo to concentrate on its plan to go all-electric by 2025, which is not that far away.

Volvo Cars is in the process of planning and building an entirely electrified range, as part of its ambition to put sustainability at the core of its operations.

By the middle of the next decade, it expects half its global sales to be fully electric and the other half hybrid — with engines supplied by the new unit.

For Geely, the planned new entity means technologically advanced and efficient engines and hybrid powertrains will become available to Geely Auto, Proton, Lotus, LEVC and LYNK & CO.

The planned new stand-alone business will also be able to supply engines to third-party manufacturers, providing possible growth opportunities.

The proposed new business is expected to employ 3000 workers from Volvo Cars and around 5000 from Geely’s combustion engine operations, including research and development, procurement, manufacturing, IT and finance functions.

No redundancies are anticipated.

Both Volvo Cars and Geely are in the process of carving out their internal combustion engine operations into new units, as a first step towards a merger of the two into a combined new stand-alone business.

Volvo Cars believes the electrification of the automotive industry will be a gradual process, so there will be significant ongoing demand for efficient hybrid powertrains alongside fully electric offerings.

“Hybrid cars need the best internal combustion engines. This new unit will have the resources, scale and expertise to develop these powertrains cost efficiently,” Volvo Cars’ President and Chief Executive, Håkan Samuelsson, said.

Detailed plans of the new business are under development and subject to union negotiations, as well as board and relevant authority approvals.

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Riley

Chris Riley has been a journalist for almost 40 years. He has spent half of his career as a writer, editor and production editor in newspapers, the rest of the time driving and writing about cars both in print and online. His love affair with cars began as a teenager with the purchase of an old VW Beetle, followed by another Beetle and a string of other cars on which he has wasted too much time and money. A self-confessed geek, he’s not afraid to ask the hard questions - at the risk of sounding silly.