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Volvo engines could power Lotus in proposed engine deal with Geely

Volvo and Geely propose merging their engine-development operations to create a standalone entity.

Volvo inline-four engine
It'd be yet another step to bring Volvo and Geely closer together.

We live in a world where BMW recalls the 2020 Toyota Supra because of collaborative efforts in the automotive industry. Now, get ready for the next potential oddball in the world: a Volvo-powered Lotus.

If a proposed deal between Volvo and its parent automaker, China's Geely, gets the greenlight, that's very well a possibility. Both automakers said on Monday in a joint statement that they intend to combine their internal-combustion engine development operations into a standalone unit. The goal is to free up resources at Volvo to focus on battery-electric cars. Meanwhile, Geely receives high-quality engines from the Swedish company.

In a world where this deal goes through, and it sounds like it will, both companies said these jointly developed engines could power Lotus sports cars among other companies now in Geely's orbit. Those include Lynk & Co and Geely-branded cars themselves. If you don't recall, Geely took a majority ownership stake in a company named Proton, which owned Lotus. In the process, the Chinese automaker bought itself a British sports car brand -- and it's very keen to return the marque to its former glory.

Although Volvo plans to focus its in-house efforts on electric cars, it doesn't want to throw away the internal-combustion engine. The company reiterated that electrification will be a gradual process and it will fund the proposed engine operation between Geely with the talent of approximately 3,000 employees. Any vehicles that require an engine at Volvo in the future will still be electrified (i.e., run a hybrid powertrain of some sort) but the days of the engine alone doing all the work will be long-gone at the automaker.

Both automakers also foresee the ability to supply outside automakers with hybrid engines from the new business unit.

The deal isn't final yet, however. Relevant labor unions, boards and regulators will all need to weigh in. But, a British sports car powered by a Swedish-Chinese engine. There's a brave new world, to say the least.