Volvo Cars has stepped in to help its sister battery-electric brand Polestar avoid punitive European Union tariffs by opening its Slovakian plant to build its next car.

The pair, both owned by Chinese conglomerate Geely, announce they have signed a memorandum of understanding (MOU) for development and production of Polestar’s upcoming premium compact SUV at Volvo’s manufacturing plant currently under construction in Kosice, Slovakia.

 Polestar 7 is slated to launch in 2028 and will be the second car to be built at the Kosice plant; the first is a yet-to-be-announced Volvo model.

Polestar originally planned to build the Polestar 7 at its parent company’s facilities in China but have changed course to reduce potential tariff exposure on Chinese-made BEVs. There is an ongoing debate within the European Commission regarding tariffing Chinese BEVs.

Polestar 7 will share Volvo Cars’ common technology base with two forthcoming Volvo models, including the Volvo EX60, says the company.

Production will benefit from group component sharing, megacasting, cell-to-body technology with next-generation battery density and performance, and in-house-developed e-motors, according to company statements.

The Kosice plant will be Volvo’s third manufacturing plant in Europe, joining the Ghent factory in Belgium and the Torslanda plant in Sweden.

Kosice is designed to produce up to 250,000 cars annually and is expected to provide several thousand new jobs in the region. The site also allows for future expansion.

“Our collaboration with Polestar on the development and manufacturing of the Polestar 7 underscores how Volvo Cars and Polestar continue to leverage synergies to efficiently deliver outstanding cars built for our distinct customer segments,” Håkan Samuelsson, president and CEO of Volvo Cars, says in a company statement.