French automaker Renault and Chinese partner Geely have unveiled a joint venture named HORSE Powertrain. This collaboration, which is a 50-50 partnership, aims to develop advanced hybrid and combustion engines, reflecting both companies' commitment to innovation and sustainability.
Strategic Importance and Goals
The formation of HORSE Powertrain is a critical component of Renault's strategy to stay competitive against larger rivals. By forging multiple alliances, Renault aims to cut costs and expand its market reach. For Geely, this joint venture represents a significant step in its strategy to extend its influence beyond China. Geely has previously announced a hybrid gasoline engine development deal with Mercedes-Benz and holds a stake in the German automaker.
In their joint statement, Renault and Geely emphasized the necessity of a diverse range of powertrain technologies to achieve successful decarbonization. They noted that more than half of the vehicles produced are expected to still rely on combustion engines by 2040. This highlights the ongoing relevance of combustion engines even as the industry shifts towards more sustainable solutions.
Operational and Financial Projections
HORSE Powertrain, headquartered in London, will supply powertrain units to both Renault and Geely's brands, as well as to third-party manufacturers. The venture is projected to generate approximately 15 billion euros ($16.2 billion) in annual revenue and produce around five million powertrain units per year. This ambitious target underscores the scale and potential impact of the joint venture on the global automotive market.
Matias Giannini, a former global sales executive for Vitesco Technologies, will lead HORSE Powertrain as its CEO. Geely Holding CEO Daniel Li will chair the board, bringing extensive experience and leadership to the new venture.
Regulatory Challenges and Future Prospects
The formation of this joint venture was widely anticipated since the beginning of the year. However, regulatory approval in China was reportedly delayed on at least three occasions, according to sources speaking to Reuters. Despite these delays, the official announcement marks a significant milestone for both companies.
The collaboration between Renault and Geely is expected to drive innovation in powertrain technologies, contributing to the broader goal of decarbonizing the automotive industry. By combining their expertise and resources, Renault and Geely are well-positioned to navigate the evolving landscape of the automotive sector and meet the demands of a changing market.
Renault and Geely's joint venture, HORSE Powertrain, represents a forward-thinking approach to addressing the challenges and opportunities in the automotive industry. With a focus on developing hybrid and combustion engines, this partnership is poised to make a substantial impact on the market, driving both companies towards a more sustainable and competitive future.
