French Renault Group and Chinese holding company Geely have signed an agreement to establish a global joint venture for the production of internal combustion engines, hybrid power plants and transmissions for them. This joint venture will include 17 factories located on three continents, 5 research centers and 19,000 employees of both companies. In theory, the new joint venture could capture 80% of the global market for internal combustion engines and hybrid power plants.
The creation of a giant motor JV with Geely was announced in November last year as part of the presentation of the updated Renault Group development plan, but then it was just a memorandum of intent, and now a binding agreement has been signed, that is, the JV has de facto been launched, although the formal closing of the deal should take place before the end of this year. Previously, Renault and Geely referred to their joint venture as the Horse project, but this name is not used in the latest press release, the full official name of the joint venture has not yet been made public.
It is assumed that the joint venture between Renault and Geely will be equal (50/50), but a third player from Saudi Arabia may appear in the case in the person of the national oil company Saudi Aramco, its share in the new joint venture, according to Reuters, may be 20%, but a specific no decision on this yet.
The Renault-Nissan-Mitsubishi alliance, which, in turn, is now in the process of restructuring, does not formally participate in the Renault and Geely joint venture, but Nissan and Mitsubishi will purchase the power plants they produce, and Geely's clients of the joint venture are announced, including the Swedish company Volvo and Malaysia's Proton, while keeping in mind that Volvo plans to go all-electric in 2030, meaning it has limited interest in a new motor venture.
Meanwhile, Renault Group management proceeds from the fact that even by 2040, half of the company's sales will come from ICE models, so the motor joint venture with Geely is being created for the long term, any other companies can become its customers in the future. In theory, the joint venture can satisfy 80% of the needs of the world market for “hydrocarbon” power plants for cars and produce up to 5 million end products per year. The total investment in the new joint venture will be about 7 billion euros. When developing new internal combustion engines, the company will pay attention to their adaptation to run on synthetic fuel and hydrogen, which should somewhat reassure the ardent adherents of the «green» doctrine in the West.
The control centers for the new joint venture will initially be located in Kita and Spain (in Madrid), but then a single headquarters will be created in the UK.
The signing of the deal was attended by Renault Group CEO Luca de Meo and chairman of the board of directors Geely Holding Group Eric Li.
It is curious that a couple of days ago, Renault Group Chairman Jean-Dominique Senard, in an interview with Reuters, lashed out at Chinese companies due to the aggressive expansion into the European electric car market, combined with the restriction from China supplies of gallium and germanium, necessary for the production of components for electric vehicles. China is the world leader in the supply of these metals, and it controls 94% of the market specifically for gallium.
It turns out that if Renault and Geely have found a common language in terms of internal combustion engines and hybrids and are making long-term plans, then in the electric vehicle segment they — tough competitors. Recall that recently the Alpine brand, which is part of the Renault Group, and the British brand Lotus, controlled by the Geely holding, announced the termination of the joint development of new electric sports cars.
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