© Reuters. FILE PHOTO: Renault logo is displayed at 2022 Paris Auto Show, France October 17, 2022. REUTERS/Stephane Mahe
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By Norihiko Shirouzu
BEIJING (Reuters) – Renault SA (OTC:) and China’s Geely said on Tuesday they have agreed to launch a new, equally held joint venture that will supply gasoline engines and hybrid technology to the brands they own as well as to other automakers.
The agreement represents an important benchmark in a months-long effort by the French automaker to carve out its gasoline car business as a separate company.
The joint venture will employ 19,000 people at 17 powertrain factories and three research and development hubs, the companies said, adding they expect to reach a final agreement and launch the new company in 2023.
The preliminary agreement with Geely, with which Renault (EPA:) has been negotiating in earnest for at least three months, is non-binding, a person with knowledge of the terms told Reuters.
The new company will be based in London, said the person, who was not authorised to speak to media and declined to be identified. Renault and Geely will each hold 50%, the companies said in a statement that did not detail other financial terms.
For Geely, the deal extends its pattern of building partnerships to expand beyond China. Geely also owns Volvo Cars and has a 9.7% stake in Daimler AG (ETR:).
Renault has also been in negotiations with its existing alliance partner, Nissan (OTC:) Motor Co, about new investment in an electric vehicle venture it also plans to establish. The Japanese automaker has said it is considering an investment in that venture which has been code-named Ampere.
Nissan has raised concerns about the treatment of intellectual property, including battery and powertrain technology, in its talks with Renault and has indicated those concerns extend to any partnership the French automaker strikes with Geely, people with knowledge of the discussions have said.
Renault and Geely said they expect their new joint venture would supply internal combustion engines and hybrid powertrains to Nissan and the junior partner in Renault’s existing alliance, Mitsubishi Motors (OTC:).
They said it would have the capacity to supply about 5 million engines and hybrid systems per year once operational.
Nissan had no immediate comment.
The announcement came ahead of Renault’s capital markets day on Tuesday in Paris where Chief Executive Luca de Meo is scheduled to update investors on the company’s strategy and financial projections.
Renault’s De Meo has said the automaker was seeking a partner that would bring scale and drive down cost in its internal combustion business, including hybrids.
Renault and Geely Automobile also have an existing joint venture in South Korea.
Separately, Volvo Cars said it would divest its 33% stake in its Aurobay unit to Geely, without disclosing terms.
