You never saw this coming did you? More than 10 years after the Renault-powered Proton Savvy was discontinued, we are now seeing the beginning of a new chapter that could see Renault engines coming back to Proton.
Renault and Geely has signed an agreement yesterday to setup a 50-50 joint venture to build and supply combustion engines (including hybrids) to brands under the Renault and Geely group, as well as to other manufacturers worldwide.
“At launch, the new company is expected to supply multiple industrial customers including Renault, Dacia, Geely Auto, Volvo Cars, Lynk & Co, Proton, and also Nissan and Mitsubishi Motors Company. In future, the partnership could also offer powertrain technologies to third-party car brands,” said the two companies in a joint statement.
The non-binding framework agreement was signed by three parties – Geely Holding Group (Geely Holding), Geely Automobile Holdings Limited, and Renault Group. A formal execution will follow in 2023.
The yet-to-be-named new company is said to be based in London.
The move is part of Renault’s organizational restructuring that will see the French automotive icon splitting its business into 5 divisions – Power for combustion engine products; Ampere for EVs and software; Alpine for sports cars; Mobilize for financing and mobility services; The Future is Neutral for recycling.
The Power division will be responsible for the Horse project, which aims to pivot Renault into the engine supply business. Renault says Horse has the potential to cover 80 percent of the world’s combustion engine needs.
Renault is also looking for a separate listing of Ampere at the Euronext Paris stock exchange next year. Ampere will operate independently of Renault’s other combustion engine products business.
The latest agreement comes following Renault Korea’s partnership with Geely, which will see the latter supplying hybrid engines to Renault models in Korea.
The new Renault-Geely agreement is likely to mirror Aurobay, which now holds all Geely subsidiary Volvo Car’s combustion engine assets.
Also read: Despite EV-only vow by 2030, Volvo is quietly playing both sides by betting on dirty ICEs
Although Geely’s subsidiary Volvo has committed itself to becoming an EV-only company by 2030, it is quietly maintaining back-up plan, in case it needs to make a U-turn.
Volvo Car controls 33 percent of Aurobay, which has been tasked to push its ‘dirty’ combustion engines to other manufacturers and Volvo will only relinquish its stakes once it is convinced that EVs have become mainstream.
The Geely group is pushing for a consolidation of combustion engine assets. Although EVs will gain prominence, Geely doesn’t believe in predictions of an EV-only future, neither does Renault, hence the foundation of this partnership.
Even though Renault is Europe’s pioneer for affordable EVs (with its Zoe), Renault CEO Luca de Meo has said that EV prices are not coming down as predicted, and he doesn’t believe that EVs can match prices of combustion engine cars.
At the same time, consolidation of the combustion engine business is necessary to free up resources to develop EVs, which will be necessary in European markets.
Luca de Meo, CEO Renault Group said, “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. We’ll be able to offer best-in-class powertrain and electrified solutions to multiple OEM brands worldwide, unleashing the market potential for this low emission technology.”
Mirroring Aurobay’s arrangement, Geely will pull Renault into its orbit. It also means that Geely will pull Renault away from the Renault-Nissan-Mitsubishi Motors Alliance, which in the post-Carlos Ghosn era, is ambling along with little to no direction.
Nissan will of course want to have a say in the matter, because some of the intellectual property used in the engine(s) design belong to them, but Renault’s direction for the future is clear – it no longer wants deeper integration into Nissan, so it will work towards a settlement with Nissan.
The Renault-Geely partnership will have a capacity of over 5 million internal combustion, hybrid and plug-in hybrid engines and transmissions per year, supplying over 130 countries and regions.
