Renault Group and Geely To Form Joint Venture Company For Combustion Engine Production

THE Zhejiang Geely Holding Group – more commonly referred to as Geely – is relatively young in the global auto industry, having been established in 1986. Yet over the past decade, it has acquired several well-known international automotive brands and formed alliances or partnerships with others. Its business today spans the automotive value chain, from research, development and design to production, sales and servicing.

The latest partnership announced today is with Renault SA where a 50-50 joint venture will be formed for producing petrol engines and developing hybrid technology that will be used by each company’s brands, and possibly supplied to others.

Renault has long been an engine supplier to other carmakers, including Mercedes-Benz and Proton, so it is already familiar with the business. Geely has so far used its powertrains within its own group brands, taking advantage of shared resources.

The new company will be a standalone unit which will have the support of 5 global R&D centres. It will have a long list of customers and large volumes by virtue of both Renault and Geely already having numerous carmakers within their groups. The Renault Alliance, for instance, includes Nissan and Mitsubishi Motors as well as Dacia and Alpine. Geely has Volvo Cars, Lynk & Co, and Proton.

The non-binding framework agreement signed today describes a plan to operate 17 powertrain plants on 3 continents, employing around 19,000 people in total. The combined annual volume from these plants will be in excess of 5 million combustion engines, hybrid powertrains as well as transmissions. The new company’s joint product portfolio and regional footprint could supply to 80% of the global market demand for combustion engines in over 130 countries and regions.

Comments from CEOs

Luca de Meo, CEO Renault Group: “As Renault Group accelerates with its Renaulution transformation to capture value on the entire new automotive value chain, we are pleased to have agreed plans for an ambitious partnership with Geely to keep developing the ICE and hybrid engine technologies that will remain a critical part of the automotive supply chain for decades to come. We’ll be able to offer best-in-class powertrain and electrified solutions to multiple OEM brands worldwide, unleashing the market potential for this low emission technology.”

Eric Li ShuFu, Geely Holding Group Chairman: “Today’s agreement with Renault Group will enable the creation of a global leader in hybrid technologies to provide highly efficient advanced solutions for automakers around the world. We are looking forward to working together with Luca de Meo and his Renault team to make this partnership a reality. This agreement builds on our commitment to leverage our group wide technological expertise and brand portfolio to continue our pioneering journey in sustainability and value creation that leads to consumer excellence.”

This new development will free Renault of having to continue its own direct investments in combustion engine development and production and allow it to give more focus to electric vehicle development, especially powertrains and technology. While it will need combustion engines for some time to come – but in regions outside Europe – it needs to make faster advances in EV development with European markets set to go fully electric by 2035.

In the third chapter of its Renaulution plan: Revolution, the Renault Group will build upon 5 focused businesses. One of them is called Ampere, which will develop, manufacture, and sell full EV passenger cars, with cutting-edge software-defined vehicle (SDV) technology. Ampere will be based in France and have a workforce of around 10,000 employees. Before 2030, Ampere’s line-up will consist of 6 electric cars with a target of around 1 million EVs for the Renault brand in 2031. – By Chips Yap