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

Band Norihiko Shirouzu

BEIJING, Aug. 9 (Reuters) – French Renault SA RENA.PA aims to revitalize its business in China by forming a hybrid vehicle joint venture with Geely Holding Group GEELY.UL, sources said, a year after it ended its previous operation on the world’s largest auto market.

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

The new company 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 localization of Geely’s Lynk & Co-brand hybrid vehicles in South Korea, where Renault has been manufacturing and selling cars for more than two decades.

A document viewed by Reuters said the Sino-French company would initially focus on China and South Korea, but would likely expand to cover fast-growing Asian markets.

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

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

However, the Geely-Renault venture would be completely separate from Geely’s venture with Daimler.

For Geely, China’s largest local automaker by sales, the latest new joint venture would bolster its strategy to leverage partnerships with other automakers to share technologies, supply chains and manufacturing, lowering the development costs of EV and other future mobility technology.

For Renault, the partnership would help the French carmaker rebuild its presence in China after it ended a joint venture with Dongfeng Motor Group 0489.HK in 2020.

Renault and Geely would make the cars “in Geely’s existing factories” with the aim of eventually exporting the vehicles, a document said. However, a source said it was unlikely they would immediately reveal which factories the production would take place at.

The proposed Renault-Geely joint venture could be controlled by Geely, one of the sources said, unlike Geely’s Smart joint venture with Daimler, in which both companies have an equal share.

The two sources who spoke to Reuters were not named as they are not authorized 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 7201.T had the same Chinese partner, Dongfeng, before the Renault-Dongfeng joint venture was dissolved.

Renault and Nissan have also long co-designed, manufactured and marketed cars that share platforms and other vehicle components to reduce production 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 management told Reuters they were unaware that Renault was in negotiations with Geely. They said Nissan could potentially benefit from leveraging Geely’s supply chains, but it was too early to assess the impact.

(Reporting by Norihiko Shirouzu; editing by Sam Holmes)

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