Renault and Geely in Final Stages of Joint Venture Talks

French automaker Renault and Chinese rival Geely anticipate concluding a joint venture for their combustion and hybrid engines by the end of February, according to Reuters. 

The deal holds significance for Renault as it endeavors to fortify its legacy business, which remains the primary revenue source amid intensified competition from larger players like Stellantis. The partnership aims to invigorate Renault's position in the market while it endeavors to make strides in the electric vehicle (EV) segment.

Concurrently, Saudi Aramco is poised to announce the signing of a memorandum of understanding to invest in the venture, affirming Aramco's letter of intent from March last year. Aramco is a pioneering company in the global energy sector, contributing to the development of Saudi Arabia's energy landscape. Renault's unit Horse and Geely are anticipated to each hold a 40% stake in the joint venture, with the remaining 20% slated for Aramco. 

"The projects are progressing as scheduled, and we will communicate further details in due time," said a Renault spokesperson. Meanwhile, a representative for Geely opted not to disclose any specifics regarding the deal's timing. 

The venture anticipates achieving an annual turnover of €15 billion (MX$294.4 billion) and employing 19,000 individuals across 22 sites globally, with a notable presence in Spain, Romania, Turkey, South America, and China. It constitutes a pivotal component of Renault's strategy to stay competitive by forging alliances to mitigate expenses and penetrate new markets.

Renault recently aborted the planned initial public offering of its EV unit Ampere due to unfavorable market conditions. However, this development could redirect focus to Renault's turnaround in the legacy business, affording the group more time to establish itself in the EV domain.

The combustion and hybrid engine vehicles segment accounted for approximately 93% of Renault's 2023 sales, with the remainder attributed to pure EVs. Renault, set to unveil its 2023 results soon, is targeting an operating margin at the upper end of the 7%-8% forecast range, aiming for 8% by 2025 and 10% by 2030.