Following the framework agreement announced in November 2022, Geely Holding Group and Renault Group have signed today a binding 50/50 joint venture agreement to launch a new powertrain technology company. It aims to become the global leader in developing, manufacturing, and supplying best-in-class hybrid powertrains and highly efficient ICE powertrains.

Aramco, which signed a letter of intent with Renault and Geely on March 2nd, 2023, is evaluating a strategic investment in this new powertrain technology company. Aramco’s investment would support the company’s growth and contribute to key research and development across synthetic fuel solutions and next-gen hydrogen technologies.

Synthetic fuels, including e-fuels and hydrogen, are part of the solution for decarbonization in the automotive industry, including for the ICE vehicles on the road today.

50/50

The joint venture will be jointly led by Renault Group and Geely, with equal board members to formulate and execute strategies and set the direction for the joint venture. The initial organization will secure the continuity of the business with two operational centers in charge of the respective operations: Madrid for Renault Group and Hangzhou Bay for Geely.

An executive team will be based in the new company’s headquarters, which is intended to be established in the UK, to consolidate operations, build on synergies, and define future plans.

It’s a little bit strange that there is no word about the company’s name. Earlier, the distinction was made between the ‘electrical’ company Ampere, from which the IPO has been postponed, and Horse, the company to be occupied by other alternatives, including ICE, hybrids, e-fuels, etc. Apparently, it won’t be Horse, finally.

Renault Group and Geely will transfer intellectual property to the operational centers enabling them to be fully autonomous in developing future powertrain technologies capable of addressing all market expectations.

Supplying everyone

The new joint venture’s complementary product portfolio and regional footprint could offer solutions for 80% of the global ICE and hybrid market. The new company is expected to supply multiple industrial customers at launch, including Renault Group, Geely Auto, Volvo Cars, Proton, Nissan, Mitsubishi Motors Company, and Punch Torino.

In the future, the joint venture will be capable of providing end-to-end solutions in powertrain technologies to third-party car brands and will welcome partners to strengthen the value chain further.

“Facing today’s automotive challenges, no one can claim to have all the solutions alone,” commented Luca de Meo, Renault Group CEO. “Coming up with breakthrough innovations requires combining expertise and assets. There is no time to lose regarding the global race for decarbonizing road transport, and it will not be business as usual.”

“Today, we are proud to join forces with a great company like Geely to set up a new player, up to the challenge, able to disrupt the game and open the way for ultra-low emissions ICE technologies. I want to thank Eric Li Shufu for his trust: we are now ready to move forward,” he concluded.

Eric Li, chairman of Geely Holding, responded: “We are pleased to be embarking on this journey to become a global leader in hybrid technologies, providing low-emission solutions for automakers around the world. We look forward to working with Luca de Meo and his Renault team.”

“With this agreement, we reiterate our commitment to leveraging our group-wide technological expertise and brand portfolio to pioneer the journey to greater sustainability and value creation, which will lead to better consumer experiences,” he added.

Comments of the chairman

Just now, Jean-Dominique Senard, President of the Renault board, commented on the question in an interview organized by La Tribune. He insists that Renault has already taken the turn to electrification, but he’s also persuaded that the ICE engine, in its most modern forms, will last for another 70 years.

He’s confident that technology will provide the necessary levers but asks at what price this will come. “We will reach victory here when we can set a price for so-called e-fuels as low as 1 or 1,5 euro per liter. According to many experts, this will already be possible in five years.”

“Renault is forced to prepare the future, which means also looking for alternatives,” he continued. “We have to care for our employees and customers.” And Senard doesn’t see the conditions to go full ahead for electric drive fulfilled yet.

“The challenges are multiple; they are technological, financial, and energetic, but the supply of raw materials is all important. “We urgently need a ‘raw material diplomacy’. We failed to anticipate this; the future wars will be those for raw materials.”

And he commented to Reuters: “If there’s a real geopolitical crisis, the damage to battery factories solely powered by products coming from outside will be considerable. That’s the issue. We can produce electric vehicles, but we are struggling to ensure the security of our supplies.”

Back in business

Meanwhile, Renault proudly announces that it is back in business again. For the first six months of 2023, the Renault brand sold 770 807 vehicles, 11% more than the year before. Sales rose by 21% in Europe, resulting in second place in Europe and number one in homeland France.

And, of course, there’s also Dacia, the low-cost daughter, who is even doing better and beating its sales records month after month in almost all of Europe. We will comment on this evolution in a dedicated article coming soon.