Geely and Renault Group have signed a non-binding framework agreement to create a new global leader to develop, manufacture and supply best-in-class hybrid powertrains and highly efficient ICE powertrains.

Under the framework agreement, Geely and Renault Group will hold respective 50-50 equity stakes in the new company.

The new company will be a standalone global supplier of propulsion system solutions, producing next generation hybrid propulsion systems, and developing carbon free and low-emission technologies from five global R&D centres. 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.

The new company is planned to operate 17 powertrain plants in 3 continents, employing around 19,000 people in total. It will have a combined capacity of over 5 million internal combustion, hybrid and plug-in hybrid engines and transmissions per year, supplying over 130 countries and regions. The new company’s joint product portfolio and regional footprint could offer solutions for 80% of the global ICE market.

News of this agreement has coincided with a Renault Group Capital Market Day in Paris, at which the Group has outlined a range of initiatives to speed-up its transformation and shared its mid-term financial outlook.

Luca de Meo, CEO Renault Group: “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.”

Eric Li, Geely Holding Group Chairman, 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. We are looking forward to working together with Luca de Meo and his Renault team to make this partnership a reality. This agreement builds on our commitment to leverage our group wide technological expertise and brand portfolio to continue our pioneering journey in sustainability and value creation that leads to consumer excellence.”

The new company will welcome partners and shareholders attracted by the opportunity to contribute to industry-leading “cradle-to-grave” low and zero emission eco-systems worldwide. This framework agreement is expected to lead to formal combination in 2023. Further details of the new entity are expected to be announced over coming months.