Automakers Geely Holding Group and Renault Group are to form a 50-50 joint venture company to develop, manufacture and supply hybrid and internal combustion engine powertrains globally.
The new entity will be a standalone global supplier of propulsion system solutions, producing hybrid propulsion systems and developing carbon free and low-emission technologies from five global research and development centers, the automakers said Nov. 8.
The JV company is planned to have 17 powertrain plants globally with a combined capacity of more than 5 million/year of internal combustion, hybrid and plug-in hybrid engines and transmissions, allowing it to offer solutions for 80% of the global ICE market, they said.
The new company was expected to represent revenues of Eur15 billion ($15 billion) globally from its onset, Renault said at its Capital Market Day in Paris.
Besides Renault and Geely, the new JV company was expected to supply customers including Dacia, Lynk & Co, Mitsubishi Motors, Nissan, Proton and Volvo Cars, Geely and Renault said, adding the JV could also possibly offer powertrain technologies to third-party car brands in the future.
“As Renault Group accelerates with its Renaulution transformation to capture value on the entire new automotive value chain, we are pleased to have agreed plans for an ambitious partnership with Geely to keep developing the ICE and hybrid engine technologies that will remain a critical part of the automotive supply chain for decades to come,” Renault Group CEO Luca de Meo said.
“Today’s agreement with Renault Group will enable the creation of a global leader in hybrid technologies to provide highly efficient advanced solutions for automakers around the world,” Geely Holding Group Chairman Eric Li said.
At its Capital Market Day, Renault also said it planned to expand its Alpine brand globally, it planned to launch light commercial vehicles in partnership with an unnamed OEM and that it had accelerated or extended its partnerships with technology companies Google and Qualcomm Technologies to develop a software-defined vehicle.
Geely buys Volvo’s 33% stake in Aurobay
Separately, Geely has bought Volvo Cars’ 33% holding in Swedish powertrain engineering company Aurobay, which was carved out as a stand-alone business in 2021, Volvo said Nov. 8.
It did not provide financial details on the transaction but said the proceeds would be used for Volvo to become a fully electric company, including its new electric motor production line in Skovde, Sweden. The deal was expected to close before the end of 2022, subject to regulatory approvals.
Volvo’s divestment of the holding allowed it to fully exit its participation in the development and manufacturing of ICE vehicles and was part of its transformation into a fully electric vehicle manufacturer, it said.
However, Aurobay would remain a strategic partner to Volvo and the sole provider of hybrids and mild-hybrid powertrains during its transition to fully electric production by 2030.
“As we continue to execute on our strategy, transactions like this will be an important supplement to our investments and partnerships for the future,” Volvo Cars CFO Johan Ekdahl said.
The auto market is a major consumer of steel, with Platts, part of S&P Global Commodity Insights, assessing domestic HRC prices in Northern Europe at Eur650/mt ex-works Ruhr Nov. 7, down 29.5% since the start of 2022.
— Jacqueline Holman