Renault Group and Geely Holding Group have announced a joint venture to develop next-generation hybrid powertrains. The new company, jointly owned by Renault and Geely, will have an annual production capacity of up to five million internal combustion, hybrid and plug-in hybrid engines and transmissions.
The joint venture will be headquartered in the UK and have two operational centres: Madrid for Renault and Hangzhou Bay for Geely. The company will also have 17 engine plants and five research and development centres across Europe, China and the United States, employing 19,000 workers.
An equal number of board members from Renault and Geely will lead the new business unit. The company will initially focus on developing hybrid powertrains for passenger cars, but it also expects to develop powertrains for light commercial vehicles and other applications in the future.
Upon launch, the company expects to supply multiple industrial customers, including Renault Group, Geely Auto, Volvo Cars, Proton, Nissan, Mitsubishi Motors Company and PUNCH Torino. In the future, the joint venture aims to offer end-to-end powertrain solutions to third-party car brands and is open to forming partnerships with new stakeholders.
Aramco, the Saudi Arabian oil company, has signed a letter of intent to invest in the joint venture. Aramco's investment would support the development of new technologies, such as synthetic fuels and hydrogen, that could help to decarbonise the automotive industry.
The joint venture between Renault and Geely is significant in the global automotive industry. The two companies have complementary strengths in powertrain development, and the joint venture will allow them to share resources and expertise. Intellectual property related to powertrain technologies will be transferred to the operational centres, enabling them to operate autonomously and develop innovative powertrain solutions to meet market demands. With its comprehensive product portfolio and global footprint, the joint venture has the potential to cater to 80 per cent of the worldwide market for internal combustion engines and hybrid powertrains.
Luca de Meo, CEO of Renault Group, expressed enthusiasm about the joint venture, highlighting the need for collaboration in finding innovative solutions to today's automotive challenges. De Meo said: "Facing today's automotive challenges, no one can claim to have all the solutions, alone. Coming up with breakthrough innovations requires to combine expertise and assets. When it comes about the global race for decarbonising road transports, there is no time to lose, and it will not be business as usual. Today, we are proud to join forces with a great company like Geely to set up a new player, up to the challenge, able to disrupt the game and open the way for ultra-low emissions ICE technologies."
Eric Li, Geely Holding Group Chairman, echoed de Meo's sentiments, stating that Geely is excited to embark on this journey to become a global leader in hybrid technologies. He added, "We are looking forward to working with Luca de Meo and his Renault team. With this agreement, we reiterate our commitment to leveraging our group-wide technological expertise and brand portfolio to pioneer the journey to greater sustainability and value creation which will lead to better consumer experiences."
The joint venture between Renault and Geely is good news for consumers looking for more fuel-efficient and environmentally friendly cars. The new company will be able to develop and produce next-generation hybrid powertrains at scale, which will help to bring down the cost of these vehicles. Developing at scale will make hybrid cars more accessible to a wider range of consumers.
The completion of the transaction is expected to take place in the second half of 2023, subject to the customary conditions, including approval from antitrust and foreign direct investment authorities.