French carmaker Renault is eyeing a key deal with Chinese rival Geely to form a joint venture for their combustion and hybrid engines towards the end of February, Reuters reported quoting sources. The deal will give a boost to Renault’s legacy combustion business that still brings in most of its income while the company simultaneously tries to make a headway with electric vehicles (EVs).
Strategy to stay in the race
Despite an improved performance, the French manufacturer is overshadowed by bigger rivals such as Stellantis and thus a deal like this will help it bolster its sales. This is one of the two main pillars of Renault’s strategy to stay in the race against larger competitors – signing multiple partnerships to reduce costs and access new markets. The other pillar – a planned initial public offering of EV unit Ampere – hit a speed-bump last month when Renault abruptly cancelled it by citing unfavorable market conditions.
Saudi Aramco mulling an investment
Meanwhile, Saudi Aramco is looking to sign a memorandum of understanding to invest in the joint venture, a move that would confirm Aramco’s letter of intent from March last year. Renault’s unit Horse and Geely could end up with 40% of the joint venture each, with the remaining 20% going to Aramco. Discussions on the precise investment of the Saudi group are, however, ongoing.
Spilt of shares in the joint venture
In July last year, Renault and Geely had contemplated that the share of the venture would be split 50-50, with Geely’s stake shared between its subsidiaries – 33% for Aurobay and 17% for GHPT. “The projects advance as planned, we will communicate in due time,” a spokesperson for Renault told Reuters, while a spokesperson for Geely declined to give any details on the deal’s timing.
Future goals
The joint venture aims to rake in 15 billion euros (USD 16 billion) in annual turnover and employ 19,000 people on 22 sites around the world, especially in Spain, Romania, Turkey, South America and China. The Renault-Geely venture will supply both the groups’ brands as well as third-party manufacturers. As per Reuters sources, carmakers and other industry sectors have expressed interest in the new supplier.