France’s Renault, China's Geely to explore new hybrid-focused JV – sources

BEIJING (Reuters) – France’s Renault SA is looking to revive business in China by forming a hybrid vehicle joint venture with Geely Holding Group, sources said, a year after it ended its previous operation in the world’s largest car market.

FILE PHOTO: The logo of Renault carmaker is pictured at a dealership in Vertou, near Nantes, France, January 13, 2021. REUTERS/Stephane Mahe/File Photo

According to two people familiar with the discussions and documents seen by Reuters, the two companies have signed a “framework agreement” to set up the joint venture. An announcement about the possible joint venture could be made as early as Monday.

The new venture would make and sell Renault-branded petrol-electric hybrid cars in China using Geely’s technologies, supply chains and manufacturing facilities while Renault would focus on sales and marketing.

As part of the partnership, the two automakers also agreed to explore a joint localisation of Geely’s Lynk & Co-brand hybrid vehicles in South Korea where Renault has been manufacturing and selling cars for more than two decades.

One document Reuters viewed said the Sino-French venture would focus on China and South Korea initially but would likely to be expanded to cover fast-growing Asian markets.

Geely and Renault are also looking at developing full electric battery cars for the venture, one of the two sources said.

The new venture is modeled on an EV-focused venture Geely set up in 2019 with Daimler, which plans to manufacture in China and sell Smart-brand EVs based on Geely technology using Daimler’s global sales network.

The Geely-Renault venture, however, would be completely separate from Geely’s venture with Daimler.

For Geely, China’s biggest local automaker by sales, the newest new joint venture would strengthen its strategy to use partnerships with other automakers to share technologies, supply chains and manufacturing, which reduces development costs of EV and other future mobility technology.

For Renault, the partnership would help the French automaker rebuild its presence in China after it ended a joint venture with Dongfeng Motor Group in 2020.

Renault and Geely would make the cars “in Geely’s existing factories” with an aim to eventually export the vehicles, one document read. However, one source said they were unlikely to immediately disclose which plants production would take place at.

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 equal share.

The two sources who spoke with Reuters declined to be named because they are not authorised to speak to the media.

A Geely spokesperson declined to comment. A spokesperson for Renault China did not immediately respond to requests for comment.

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 also have long designed, produced and marketed cars jointly 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 impact the Renault-Nissan alliance.

Two Nissan management leaders told Reuters they were unaware Renault was in negotiations with Geely. They said Nissan could possibly benefit if it tapped into Geely’s supply chains but it was too early to assess the impact.

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