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Renault will partner with Geely to sell hybrid cars in China, marking the French group’s first big deal in the world’s second-biggest economy since it exited its main joint venture last year.
Geely, the Chinese owner of Sweden’s Volvo Cars, and Renault said on Monday they would share resources and technology to sell hybrid vehicles in Asia in an effort by the latter to tap into China’s rapidly growing electric car market.
Renault pulled out of a lossmaking petrol car joint venture with China’s Dongfeng Motor Group in April 2020 after the coronavirus pandemic deepened two years of declining sales. The withdrawal was a rare example of an international automaker reducing its presence in the world’s largest car market.
It was also a reversal of a strategy put in place in 2016 by Carlos Ghosn, the former Renault chief. The company had retained a small presence in China through its light commercial vehicle business with Brilliance China and an electric car joint venture with Jiangling Motors.
The French group and Geely will make Renault-branded hybrids, with the former focusing on branding and customer service. The companies will also partner in South Korea, where Renault has a tie-up with Samsung. The two groups plan to make cars based on platforms from Lynk & Co, a hybrid-focused brand founded by Geely in 2016.
Geely, which also has a minority stake in Germany’s Daimler and is China’s largest privately owned automaker by vehicles sold, has been moving to position itself at the core of the global automobile industry’s switch towards EVs.
In the past year, Geely has opened up its electric car manufacturing architecture to partners, including the internet group Baidu, and has launched a premium electric car brand to try and take on industry leader Tesla.
Sales of so-called new energy vehicles, which include battery-powered and plug-in hybrids, have accelerated rapidly in China since mid-2020 following a year-long decline after the government cut subsidies.
The success of Tesla and local EV makers such as Nio, Li Auto and Xpeng has led to fierce competition in the sector and pressured global automakers to launch electrified models that appeal to Chinese consumers.
After more than three years of hovering at 5 per cent of total car sales, China’s new energy vehicles market rose to about 10 per cent of sales in the first half of 2021. Beijing wants these vehicles to account for about 20 per cent of total car sales by 2025.