New auto company to feature 17 plants, 5 global R&D centers on 3 continents

China's motor giant Geely and French carmaker Renault Group have entered a 50-50 joint venture partnership, forming a new automotive company with the ambition of leading the market in next-generation hybrid and high-efficiency engines.

A joint statement from Geely and Renault released on Tuesday said the new company will incorporate 17 engine plants and five research and development centers across three continents and establish its headquarters in the United Kingdom.

The companies plan to invest up to 7 billion euros ($7.7 billion) to advance the development of low-emission petrol, diesel, and hybrid engines, known as powertrain solutions.

Powertrain technology refers to the group of components in a vehicle that generate power and deliver it to the road surface, water, or air.

In the context of electric and hybrid cars, the powertrain also refers to the components used to propel the vehicle, which typically includes the electric motor, battery pack, and the control system.

With a workforce of 19,000, the organization is strategically structured to offer full-scale powertrain technology solutions for multiple original equipment manufacturers, said the statement. Its business model has been crafted to attract new partners, underpinning its future growth and expansion, it added.

The statement noted that Saudi Arabia's oil and gas giant Aramco is evaluating a strategic investment in this new powertrain technology company, though share capital ownership of the joint venture will be co-controlled by both Geely and Renault Group.

Aramco's investment would boost the company's growth and fund pivotal research and development in synthetic fuel solutions and cutting-edge hydrogen technologies.

The automotive industry perceives synthetic fuels, e-fuels, and hydrogen as crucial elements in the decarbonization process, even for existing internal combustion engine vehicles.

Eric Li, Geely Holding Group chairman, said: "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."

Luca de Meo, CEO Renault Group, said: "Facing today's automotive challenges, no one can claim to have all the solutions, alone. Coming up with breakthrough innovations requires combining expertise and assets.

"When it comes about the global race for decarbonizing road transports, there is no time to lose, 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."

The initial structure of the company will maintain business continuity through two operational hubs: one in Hangzhou for Geely and the other in Madrid for Renault Group, said the news release.

The headquarters for the new company, to be established in the UK, will house an executive team responsible for overseeing operations, leveraging synergies, and charting future strategies.

Aiming to reach an annual production capacity of up to 5 million units, the newly formed joint venture plans to manufacture a mix of internal combustion, hybrid, and plug-in hybrid engines, along with transmissions.

Geely and Renault project to finalize the transaction in the second half of 2023. Its completion, however, hinges on conditions associated with such transactions, notably the preliminary approval from antitrust authorities and institutions overseeing foreign direct investments, the statement said.