Daimler and Geely Holding said Friday they plan to jointly develop next-generation hybrid powertrains, and central to this is the development of a highly efficient gasoline engine.
In a joint statement, the German and Chinese auto giants said the new hybrid powertrains could feature in their respective brands. Mercedes-Benz was specifically mentioned for Daimler and Volvo for Geely.
The new engine for the hybrid powertrains, thought to be a 4-cylinder, will be built at plants in China and Europe, and Mercedes' powertrain division, Mercedes-Benz Drive Systems, will oversee the project.
Timing of the first application wasn't mentioned in Friday's announcement.
Talk of Mercedes and Volvo sharing powertrains dates back to 2018, when Li Shufu, the owner of Geely Holding, bought a 9.7% stake in Daimler in a deal worth $9 billion. At the same time as that deal was happening, Volvo said it was ending all further investment in internal-combustion engines.
Daimler and Geely also joined forces on the Smart brand, as well as mobility services in China. It's also been rumored that Geely's new dedicated EV platform known as the Sustainable Experience Architecture (SEA) could be utilized by Daimler for future compact cars from Mercedes.
Daimler is also working with the Volvo truck manufacturer, which is unrelated to the Volvo car brand, on fuel cell powertrains. The two companies in April agreed to jointly develop a fuel cell powertrain for use in buses and semi-trailer trucks.