BEIJING – France’s Renault SA said on Monday it seeks to revive business in China by forming a hybrid vehicle joint venture with Geely Holding Group, a year after its previous operation in the world’s largest auto market ended.
The two companies signed a framework agreement to establish the joint venture, which would manufacture and sell Renault-branded gasoline-electric hybrid cars in China using Geely’s technologies, supply chains and manufacturing facilities, while Renault would focus on sales and marketing.
Reuters reported the plan earlier on Monday, citing people familiar with the matter.
As part of the partnership, the two automakers also agreed to explore a joint location for Geely’s Lynk & Co-brand hybrid vehicles in South Korea, where Renault has been making and selling cars for more than two decades.
The company would initially focus on China and South Korea, but would likely expand to cover fast-growing Asian markets.
Geely and Renault are also considering developing fully electric battery cars for the company, said a source familiar with the matter.
The new venture builds on an electric vehicle-focused company that Geely established in 2019 with Daimler, which plans to manufacture in China and sell smart-brand electric vehicles based on Geely technology using Daimler’s global sales network.
The Geely-Renault company, however, would be completely separate from the Geely company with Daimler.
For Geely, China’s largest local automaker by sales, the latest new joint venture would strengthen its strategy of using partnerships with other automakers to share technologies, supply chains and manufacturing, reducing vehicle development costs. electric and other future mobility technologies.
For Renault, the partnership would help the French automaker rebuild its presence in China after a joint venture with Dongfeng Motor Group ended in 2020.
Renault and Geely would build the cars “in existing Geely factories” with the goal of eventually exporting them, a document read. However, a source said it was unlikely that they would immediately reveal in which plants the production would take place.
The proposed Renault-Geely joint venture could be controlled by Geely, one of the sources said, in contrast to Geely’s Smart joint venture with Daimler, in which both companies have the same stake.
Renault and its global alliance partner Nissan Motor Co had the same Chinese partner Dongfeng, before the Renault-Dongfeng joint venture was dissolved.
Renault and Nissan have also long jointly designed, produced and marketed automobiles that share platforms and other vehicle components to reduce manufacturing and other costs.
It was not immediately clear how Renault’s new partnership with Geely would affect the Renault-Nissan alliance.
Two leaders of Nissan’s management told Reuters they were unaware that Renault was in negotiations with Geely. They said Nissan could benefit from leveraging Geely’s supply chains, but it was too early to assess the impact.
Automakers are keen to use hybrid gasoline-electric vehicles, which have better fuel efficiency than their gasoline counterparts, to meet increasingly stringent automotive regulations around the world. These hybrid vehicles, which drivers cannot directly charge with electricity, are different from plug-in hybrid vehicles.
(Reporting by Norihiko Shirouzu; Editing by Sam Holmes and Jane Wardell)