Swedish premium carmaker Volvo Cars and its parent company Geely Holding said on Thursday that they have agreed to build a joint venture as part of the two's earlier announced plans to merge their powertrain operations into a stand-alone business.

The new company, called Aurobay, will be a global supplier of complete powertrain solutions including next-generation combustion engines, transmissions and hybrid solutions, said the two in a statement.

The announcement came as Volvo is speeding up its efforts to go fully electric.

Volvo said it will transfer to the joint venture all assets in its wholly owned subsidiary Powertrain Engineering Sweden, its engine plants in Sweden and China and other relevant assets in coming months.

"The creation of the stand-alone joint venture and the transfer of assets allows Volvo Cars to focus fully on the development of its new range of all-electric premium cars in coming years," said Volvo in a statement.

The Swedish carmaker has announced that 50 percent of its global sales will be fully electric cars by 2025 while 50 percent will be hybrids, with powertrains supplied by Aurobay. By 2030, it plans for every car it sells to be pure electric.

Geely Holding said the joint venture will benefit from the addition of a strong research and development team as well as technologically advanced and efficient powertrain technologies, creating a strong base for substantial operational, industrial and financial synergies.

This new stand-alone business will also sell its products to other carmakers, aiming to become a leading supplier of high-quality, low emission, cost-efficient powertrains solutions, said the two companies.