Toyota revealed on Thursday that it is in talks with Chinese automaker Geely, which owns Volvo, about cooperation on hybrid vehicle technology, Reuters reported.
As the company that has sold by far the most hybrids worldwide, the discussions could involve selling Toyota hybrid technology in Geely cars in China.
Any agreement, however, could also be broader.
Under the ownership of Geely, Volvo is investing heavily in electric cars and hybrids. Volvo has announced that it will build an electric and hybrid variant of each of its models next year.
Toyota's economies of scale could prove beneficial in that commitment. Toyota's hybrid system integrates two motors driving the same axle; but there are also versions of Toyota's system that enable all-wheel drive.
Volvo already builds three plug-in hybrid models using its own technology, with all-wheel drive from a rear electric motor and gas engine powering the front wheels.
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Volvo is also building its first high-performance electrified car, the Polestar 1, as a plug-in hybrid, and plans to debut its first mainstream electric-car based on its small XC40 SUV next year.
Geely has also made an electric-vehicle push in China and may have battery technology to bring to any deal with Toyota. A person familiar with the discussions told Reuters that the talks involve a Chinese supplier of battery technology that has worked with both Geely and Toyota.
Toyota told Reuters nothing has been decided on any agreement.