Renault, Geely to set up global powertrain joint venture in the UK
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Renault and Chinese car maker Geely have signed a joint venture agreement to combine their powertrain businesses for traditional engines, hybrids and plug in hybrids.
The new company will include 17 engine plants and 5 R&D centres on three 3 continents with 19,000 employees supplying multiple OEMs. Renault also supplies Nissan and Mitsubishi, while Geely Automobile Holdings includes Volvo, Proton and Lotus as well as EV maker Polestar. It also has a joint venture to build cars with Apple supplier Foxconn.
Each entity will hold exactly 50% of the new company, which aims to become the leader in next-generation hybrid and highly efficient powertrain solutions to meet worldwide demand for the years to come.
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An executive team will be based in the headquarters of the new company, which is intended to be established in the UK, to consolidate operations, build on synergies, and define future plans. The operational centres are based in Madrid for Renault Group and Hangzhou Bay in China for Geely and these will have the Intellectual Property rights to enable them to be fully autonomous in developing future powertrain technologies capable of addressing all market expectations.
The future strategy will include hydrogen and synthetic fuels but it is also an acknowledgment that while many western countries are planning to ban the sale of new combustion engine cars from 2030, the rest of the world will be moving to hybrids. The joint venture will be able to supply 80% of the global ICE and hybrid market.
In addition, Renault will procure powertrains from the joint venture for light commercial vehicles as well as the development of hybrid batteries.
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The joint venture company aims to have an annual production capacity up to five million internal combustion, hybrid and plug-in hybrid engines and transmissions per year. It will supply multiple brands worldwide with a complete range of powertrains.
“Facing today’s automotive challenges, no one can claim to have all the solutions, alone,” said Luca de Meo, CEO of the Renault Group. “Coming up with breakthrough innovations requires to combine expertise and assets. When it comes about the global race for decarbonizing 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.”
The deal follows a letter of intent signed between Saudi Arabian oil company Aramco, Geely and Renault Group. Aramco is evaluating a strategic investment in the new powertrain technology company, and the two companies say they have an attractive business model to welcome new partners.
Aramco’s investment would support the growth of the company and contribute to key research and development across synthetic fuels solutions and next-gen hydrogen technologies. Synthetic fuels including e-fuels, and hydrogen are part of the solution for decarbonation in the automotive industry, including for the ICE vehicles on the road today.
The completion of the transaction is expected to take place by the end of the year and is subject to approval by the relevant antitrust and foreign direct investment authorities.
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