Renault-Geely ICE JV approved

FRENCH manufacturer Renault and China’s Geely have agreed to launch a new, equally held joint venture that will supply petrol engines and hybrid technology to brands beneath both the Renault and Geely umbrellas, as well as to other vehicle manufacturers that have yet to be announced.

The joint venture – to be launched under a new company name next year – will employ as many as 19,000 people across 17 powertrain facilities, plus three research and development centres, across the globe.

Renault said the London-headquartered JV will bring “scale to both partners' operations that will further drive down cost”.

The collaboration will supply up to five million ICE and hybrid systems each year to Geely, Mitsubishi, Nissan and Renault – as well as other vehicle manufacturers – once operational.

According to Automotive News Europe (ANE), Renault is also in negotiations with Nissan to convince it to invest in a new electric unit.

However, Nissan has raised concerns around the treatment of intellectual property, including battery and powertrain technology, which extend to Renault’s partnership with Geely.

Renault recently dropped Nissan as its cylinder head supplier, the cost-cutting exercise between alliance partners part of what Renault says is “a multi-year cost-savings plan and strategy shift to redress its financial situation”.

The move raises further questions about the future of the Renault-Nissan-Mitsubishi alliance, which has struggled to maintain pace since the departure of former CEO Carlos Ghosn.

Despite lingering questions about strategic convergence of the three companies in the coming decade, the alliance has said it wants more than 80 per cent of new models to be based on common platform architecture by 2026.

For Geely, the joint venture with Renault extends its pattern of building partnerships outside of China. Geely already owns Volvo Cars and has a 9.7 per cent stake in Daimler.

Separately, Volvo said this week that it would divest its 33 per cent stake in the Autobray JV to Geely, without discussing terms.

Volvo and Geely finalised the Autobray venture – which includes two powertrain production facilities in Sweden and China – earlier this year.

Volvo and Geely’s separate company will continue to develop internal combustion engines, with all ICE operations, including production facilities and R&D centres, to be transferred into the new business name (Autobray).

These ICE operations include Volvo’s wholly owned subsidiary Powertrain Engineering Sweden, its Swedish engine-maker Skovde and its R&D team, plus its engine plant in China.

Analytical firm Bernstein Group told ANE that moves by Geely to consolidate ICE production globally shows there is still profit to be made from the ageing technology.

“As the world focuses on electric vehicles, this is an interesting move highlighting that ICE cars will still be produced for decades and illustrating a path for consolidation of the ICE side of the industry,” Bernstein Group said in a statement to investors.

Earlier this year, Renault signed a deal with Geely to produce a range of models based on the Chinese multinational’s CMA platform at the Renault-Samsung assembly facility in Busan (South Korea) by 2024.

Renault and Geely will also collaborate in mainland China, after the former dissolved its main joint venture there with Donfeng.