The Swedish car maker has been owned by Chinese giant Geely Holding since 2010 but remains a separate firm from Geely Automobile Holdings, which owns brands including Lotus, Lynk&Co, Proton and LEVC. Volvo's new spin-off brand Polestar is jointly owned by the two.
The proposed deal would merge Volvo and Geely Autmobile Holdings. The firms say the deal would "accelerate financial and technical synergies", with the "scale, knowledge and resources to be a leader in the ongoing transformation of the automotive industry". It added that any deal would "preserve the distinct identity" of Volvo, Geely, Lynk&Co and Polestar.
The two companies have established a joint working group headed by Volvo boss Hakan Samuelsson that will develop a proposal to send to each board. A Volvo spokesperson said the aim was to finalise the creation of the new group by the end of the year.
Geely chairman Li Shufu said the deal would “strengthen the synergies within the group while maintaining the competitive advantage and the integrity of each individual brand”.
Volvo and Geely already benefit from considerable shared technology, including the CMA and SPA platforms, and are in the process of merging their combustion engine divisions into a single firm. A spokesperson added the deal would allow the firm to "invest in new technologies such as electrification, connectivity and self driving technology."
Since Geely bought then-struggling Volvo from Ford, the brand has been revitalised and achieved record sales, largely thanks to the expansion of its SUV range. In recent years, Volvo has made several bold moves under boss Håkan Samuelsson, including setting the goal of becoming a maker of electric cars only within 20 years.