German carmaker Daimler and China's Geely, the respective parent companies of Mercedes-Benz and Volvo, announced to collaborate on developing highly efficient powertrain systems for next-generation hybrid vehicles on Friday.

The two carmakers are expected to work together on hybrid powertrain solutions, including engineering, sourcing, industrialization and efficiency measures to enhance their global competitiveness and create economies of scale.

Both sides see efficient drivetrain technologies as central to the ongoing transformation of the automotive industry and will accelerate the transition to emissions-free driving.

Daimler and Geely will use global R&D networks to work together on a next-generation gasoline engine specified for hybrid applications. It is to be produced at the companies' powertrain facilities in Europe and China, which could be utilized by Mercedes-Benz together with its partners in China as well as the wider Geely portfolio of brands including Volvo. The export of the engine from China is also an option.

Markus Schafer, chief operating officer of Mercedes-Benz said: "Our ambition is a completely carbon-neutral new passenger car fleet. The consequent electrification of our powertrain portfolio therefore is an integral part of our drivetrain strategy. To this end, we are systematically converting our portfolio so that by 2030 more than half of our passenger car sales will be comprised of plug-in hybrids or purely electric vehicles.

"Together with Volvo's internal combustion engine unit and Geely, we will further extend our synergies in the field of highly efficient drivetrain systems in China and the world. At Mercedes-Benz, the newly established unit Mercedes-Benz Drive Systems will spearhead the project and create cost efficiencies," Schafer said.

Geely President An Conghui said: "This project reflects the need for economies of scale and targeted research and development investment in clean and highly efficient powertrains and hybrid drive systems and their applications. Together with our partner, we will jointly develop the next generation of advanced technologies in order to remain at the top of the industry in times of wide-ranging change."