On November 8, Geely Automobile announced that Geely Holding, Renault and Geely Automobile have signed a non-binding framework agreement to establish a joint venture. Jointly develop, manufacture and supply hybrid and fuel powertrains worldwide.
According to the framework agreement, Geely and Renault's powertrain companies are expected to formally merge in 2023, with each party holding a 50% stake in the new company. This also means that the previous acquisition of Renault's internal combustion engine business by Geely has finally come to an end.
In fact, the two sides have already reached a tacit agreement on the "acquisition" and are waiting for the official announcement opportunity. However, there have been some setbacks during this period, the main reason being Nissan.
Nissan can't stop the "marriage"
Of course, if you want to trace the cause of the setback in the cooperation between the two sides, you have to start with a strategic plan released by Renault. Last January, Renault released its Renaulution strategic plan. According to the plan, Renault will focus on the electrification business, and in the future, half of the models launched in Europe will be pure electric vehicles. At the same time, Renault also hopes to capture a 35% share of the hybrid segment.
Obviously, Renault's move is intended to control costs and transform into new energy vehicles, and at the same time, it intends to gradually abandon the internal combustion engine project that is "dragging its feet" in business. Against this backdrop, Renault wants to split the company into two business segments: electric vehicles and internal combustion engines.
For Renault, which is in the stage of corporate business restructuring, on the one hand, Renault wants to take the opportunity to persuade Nissan to invest in its new electric vehicle division Ampere; On the other hand, Renault also plans to spin off the fuel vehicle business unit Horse and sell most of its stake to Geely. The incident also became the fuse for Renault and Nissan to stand at the negotiating table.
For Nissan, which attaches great importance to intellectual property rights, whether to invest in Renault's electric vehicle business is secondary, and the deeper reason is that it does not want the internal combustion engine technology of the two sides to fall into the hands of Chinese company Geely. Of course, the two sides also disagree on intellectual property rights for cutting-edge technologies such as solid-state batteries.
To this end, in October this year, Renault CEO Luca de Meo flew to Tokyo to meet with Nissan President and CEO Makoto Uchida. As for whether the negotiations between the two sides went smoothly, the outside world does not know. However, from the current formal cooperation between Renault and Geely, it is speculated that the negotiations between the two sides should be fruitful.
On the other hand, the cooperation between Geely and Renault continues to heat up. As early as August last year, under the mediation of former Renault China CEO Su Weiming, Renault and Geely signed a memorandum of understanding and established an innovative partnership. According to the agreement, the two parties will accelerate the implementation of Renault Group's "Renaulution Plan" in China and South Korea.
Fast forward to May, Geely and Renault's "Korea Plan" was the first to land. Geely invested nearly CNY 1.4 billion to subscribe for a 34.02% stake in Renault Korea and provided CMA architecture support to the latter's Busan plant for the production of hybrid models for overseas markets. Geely Automobile's main technology contribution is the cooperation model, and Renault Group is responsible for vehicle design, manufacturing, sales, and after-sales.
Since then, with the successful implementation of the "Korean Plan" between the two sides, the subsequent "China Plan" has laid a solid foundation for this cooperation between the two sides.
Geely-Renault is mutually beneficial
Regarding the cooperation between Geely Holding Group and Renault Group, Zhang Xiuyang, director of China Passenger Vehicle Industry Alliance, commented: Both sides have their own demands. To sum up, the demands of both sides mainly focus on three points: capital, technology and market.
At the technical level, hybrid technology is undoubtedly an important bargaining chip for the two sides to enter the negotiating table. Geely released a new power brand "Raytheon Power" as early as October last year, and Renault's internal combustion engine technology may be the dusk industry, but it will play a vital role in the blessing of hybrid technology. For Renault, Renault can share Geely's new energy technology platform to help its own new car research and development and accelerate the implementation of models that are more suitable for the Asian market.
From the perspective of the market, the two sides can be described as a hit. During the new energy transition period, Renault's global sales were sluggish from 2019 to 2021, reaching 3.754 million units, 2.949 million units, and 2.696 million units, respectively. At the same time, Renault is only left in China with Dongfeng joint venture easyjet and Jiangling New Energy joint venture with Jiangling, and the market performance is also ineffective, and the sense of presence is getting lower and lower. It just so happens that behind Geely is a strong Chinese market, which has a strong attraction for Renault, which has been "unhappy" in China.
At the same time, Geely has always wanted to "go global" and is actively deploying a broader overseas market. Just five days ago, Geely signed a cooperation agreement with Hungary's Grand Automotive Central Europe. According to the agreement, Grand Auto will sell Geely's Geometry Model C models in Hungary, the Czech Republic and Slovakia, and the first cars are expected to go on sale in the first half of 2023. This also marks the first time Geely Auto will enter the EU market.
For Geely, Renault is an established automaker with a long-established European stronghold and a strong presence in Latin America throughout the market map. Renault's Renaulution plan mentions a shift from international to more profitable businesses, particularly in Latin America, India and South Korea. Therefore, once Geely bundled Renault, it provided strong support for its "going to sea".
Previously, Renault had a clear plan for the new energy transition. According to the plan, Renault will launch at least four new electric vehicles by 2024, including electrified versions of the Renault R4 and R5, as well as a new electric car and a van. At the same time, the Renault brand will offer more than 65% of pure electric and electrified models in Europe; By 2030, the proportion of Renault brand electric vehicles will reach 90%.
As we all know, new energy vehicles are a "money-burning" industry. In order to ease the financial pressure, Renault has offered two options: one is to list the spin-off electric car company Ampere independently, and will conduct an initial public offering on Euronext Paris as soon as next year; The other is to sell the internal combustion engine business, reduce costs, and concentrate on the new energy vehicle business. It is clear that the second option has been realized, depending on whether the first can be realized next year.