Volvo Cars and its owner, Geely Holding, have announced they will jointly invest RMB 5 billion (EUR 640 million, or about £570 million) to support the initial phase of Polestar’s product, brand and industrial development.

The companies say the investment highlights the financial muscle and industrial and manufacturing expertise Polestar will have access to, and establishes the fully consolidated Volvo Cars subsidiary as a stand-alone electrified performance car company as it reveals its first production model in Shanghai this week.

The investment will be used, among other things, to establish a state-of-the-art Polestar manufacturing facility in Chengdu, China, marking a new chapter in the development of China as a manufacturing hub for Volvo Cars.

This set-up is expected radically to shorten the time Polestar needs to commercially launch its cars. Volvo Cars and Polestar will also benefit from synergies in the development of next-generation technologies such as shared procurement costs, joint development and economies of scale.

With China as a driving force behind the electrification of the global car industry, Polestar is intended to spearhead the development of new technologies and enhance Volvo Cars’ leadership within electrification and connectivity.

Polestar’s first production car, the Polestar 1, is a 600hp two-door, four-seater hybrid coupé. It has a pure electric range of 150km (over 90 miles) – claimed to be the longest full-electric range of any hybrid car on the market. The electrified performance car will go in production in Chengdu in mid-2019, and will be closely followed later in 2019 by a smaller vehicle named Polestar 2.

The companies say the Polestar 1 exemplifies the inherent synergies between the Volvo and Polestar brands. Around half of the technology under the skin of the Polestar 1 is based on Volvo’s in-house-developed SPA modular vehicle architecture, while the remaining half is entirely new and bespoke technology created by Polestar engineers working within Volvo’s R&D department.

Polestar will also benefit from having privileged access to Volvo’s global and well-established manufacturing standards and expertise as it establishes its own manufacturing operations in Chengdu.

The Polestar 2 will be the first fully electric car launched by Volvo Car Group, and the first of a total of five fully electric Polestar- or Volvo-branded vehicles to be launched between 2019 and 2021. The Polestar models announced this week follow Volvo Cars’ electrification strategy that was revealed in July of this year.

Volvo Cars announced this summer that from 2019 every new Volvo-branded car launched will have an electric motor, making it the first established car company to fully embrace electrification and place it at the core of its future business.