China’s Geely Automobile and its Swedish sister company Volvo Cars will abandon merger plans but launch a new entity to combine their powertrain operations and expand cooperation on electric vehicles, the companies said.

Geely and Volvo on Wednesday said they had decided to preserve their existing separate corporate structures after “a detailed review of combination options” but would launch a new company to combine their existing powertrain operations.

“I firmly believe that this is the best combination, the best way forward for our companies,” Volvo Cars Chief Executive Hakan Samuelsson told a joint news conference.

Shares of Geely Auto rose more than 2% on Thursday. Last year Geely Auto sold 1.32 million cars while Volvo Cars sold 661,713 vehicles.

Read more at Reuters