Geely and Renault Collaborate in Groundbreaking Joint Venture to Revolutionize ICE & Hybrid Automotive Solutions
Chinese automaker Geely Automobile Holdings (0175.HK) and French car manufacturer Renault SA (RENA.PA) have unveiled plans to invest up to 7 billion euros ($7.71 billion) in a new joint venture. The primary objective of this equally held venture is to develop gasoline engines and hybrid technology for automobiles, with a particular focus on creating more efficient internal combustion engines and hybrid systems. This collaboration comes at a time when the automotive industry is predominantly focused on the capital-intensive transition to electric vehicles (EVs).
The chairman of Geely Holding Group, Eric Li, expressed enthusiasm about the joint venture, emphasizing the aspiration to become a global leader in hybrid technologies and provide low-emission solutions for automakers worldwide. The newly formed company is expected to have a significant workforce of 19,000 employees, spread across 17 engine plants and five research and development hubs, according to information shared by Renault.
Upon its launch, the joint venture aims to supply multiple industrial customers, including renowned names such as Volvo (VOLCARb.ST), Proton, Nissan (7201.T), Mitsubishi Motors (7211.T), and PUNCH Torino. Additionally, the joint venture intends to achieve an impressive annual production capacity of up to five million internal combustion, hybrid, and plug-in hybrid engines and transmissions. In March, Reuters reported that the venture has the potential to generate around 15 billion euros ($16.53 billion) in annual revenue.
Furthermore, Renault revealed that Saudi Aramco (2222.SE) has expressed a keen interest in making a strategic investment in the new joint venture. The Saudi oil producer signed a letter of intent with Renault and Geely in March, initiating discussions about a potential stake of up to 20% in the venture. If this deal materializes, it would mark a groundbreaking move, as Aramco would become the first major oil producer to invest directly in the automotive industry. While oil companies and automakers have previously collaborated on sustainable fuels and hydrogen engines, this partnership signifies a significant step toward bridging the gap between the two industries.
The official launch of the joint venture is anticipated to take place in the second half of 2023, marking a noteworthy milestone in the collaborative efforts of Geely and Renault. By leveraging their combined expertise and resources, the companies aim to contribute to the development of advanced automotive technologies, particularly in the domain of hybrid systems. This joint effort is not only expected to enhance their competitiveness in the market but also to support the global transition toward more sustainable transportation solutions.
As the industry continues to navigate the evolving landscape of mobility, this partnership between Geely and Renault reflects a strategic response to the growing demand for hybrid technologies. By pooling their knowledge and capabilities, the companies are positioning themselves at the forefront of innovation in the automotive sector, aligning with the global trend towards cleaner and more efficient transportation. With a strong emphasis on hybrid powertrains, the joint venture aims to address the need for improved fuel efficiency and reduced emissions, providing automakers worldwide with cutting-edge solutions.