Geely and Renault have signed a joint venture agreement that will see each entity hold a 50% stake in a new powertrain technology company. According to an official release, the new company “aims to become the global leader in developing, manufacturing, and supplying best-in-class hybrid powertrains and highly efficient ICE powertrains.”

This comes several months after a framework agreement was announced by both parties last November. The deal involves Geely Holding Group (Geely Holding), Geely Automobile Holdings Limited (Geely Auto) and Renault Group. Saudi energy company Aramco has also expressed interest in the joint venture company after it signed a letter of intent in March this year to become a potential minority stakeholder, but at present, it says it is evaluating a strategic investment.

The new powertrain technology company will have 19,000 employees and will operate with 17 engines plants as well as five R&D centres in three continents. It will also have two operational centres in charge of their respective operations: Madrid for Renault and Hangzhou for Geely. Intellectual property from the involved parties will be transferred to these operational centres, enabling them to be fully autonomous in developing future powertrain technologies

Meanwhile, an executive team will be based in the headquarters of the new company in the United Kingdom to consolidate operations, build on synergies and define future plans. “The new joint venture’s complementary product portfolio and regional footprint could offer solutions for 80% of the global ICE and hybrid market,” both companies said in a joint release.

The joint venture company is targeting an annual production capacity of up to five million internal combustion, hybrid and plug-in hybrid engines and transmissions per year. At launch, it is expected to supply various automotive firms including Renault Group, Geely Auto, Volvo Cars, Proton, Nissan, Mitsubishi and Punch Torino. In the future, the joint venture will provide powertrain technologies to third-party car brands and will welcome partners to further strengthen the value chain.

“We are pleased to be embarking on this journey to become a global leader in hybrid technologies, providing low-emission solutions for automakers around the world. We are looking forward to working with Luca de Meo and his Renault team,” said Geely Holding group chairman Eric Li.

“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,” he added.

“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 decarbonizing road transports, there is no time to lose, and it will not be business as usual,” commented Luca de Meo, CEO of Renault Group.

“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. I want to thank Eric Li Shufu for his trust: we are now ready to move forward!” he continued.

A report by Nikkei Asia indicates Geely and Renault will invest up to seven billion euros (around RM35.9 billion) in the new equally held joint venture, which is expected to be launched in the second half of 2023. Aramco is said to be in advanced discussions to take up a 20% stake in the company, sourced said earlier this year.

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