German car maker Daimler said on Tuesday it will cooperate with China’s Geely to build next-generation combustion engines for use in hybrid vehicles.
Efforts to share development costs come as the growth potential for combustion engines faces the twin threat of the COVID-19 crisis and stricter fuel-efficiency and emission rules.
“The companies plan to develop a highly efficient modular engine,” a spokesman for Daimler said, adding that it would be used in hybrid drivetrains and manufactured in Europe and China.
Geely declined to comment.
The modular engine will be used in cars under different marques at Geely and Daimler, a person familiar with the matter said on condition of anonymity as the companies are still in the early stages of developing the engine.
News of the alliance was a surprise to Daimler’s works council at its factory in Untertuerkheim, which specialises in electric and gasoline powertrain assembly.