The Chinese come to Dacia? – Who is Geely, the Chinese company that will play an important role in the future of Renault

Geely is a Chinese company known in the industry for buying Volvo and having a very influential and wealthy boss. Renault has created a company with Geely that will develop and produce engines and gearboxes, and this company will also have links with Dacia and Romania. Who is Geely? What were and are the links between Dacia and China?

Electric model Geely Zeekr 001Photo: Geely

What Renault will do with Geely

Renault has announced that it has concluded a framework agreement for the creation of a joint venture with Chinese Geely, the company that will develop and produce technologies for thermal and hybrid engines, as well as gearboxes.

It must be said that there is no indication that the Mioveni plant would become subordinate to the new entity known as Horse, so it would be wrong to say that Dacia will end up “in Chinese hands”.

The new company created by Renault and Geely will become a supplier for several brands around the world with a wide range of petrol, hybrid and plug-in hybrid engines and Dacia is among the eight customers mentioned. It is clear that there will be a collaboration with Dacia and it is expected that it will come closer over time.

“Upon launch, the new company is expected to provide solutions to several industrial customers, including Renault, Dacia, Geely Auto, Volvo Cars, Lynk & Co, Proton, as well as Nissan and Mitsubishi Motors Company. In the future, the partnership could also offer propulsion technologies to other brands,” the Renault group said.

Renault says the new company, in which Geely will have a 50% stake, will operate 17 engine production plants on three continents, employing around 19,000 people in total. It will have a combined annual production capacity of more than 5 million internal combustion engines, hybrids, plug-in hybrids and transmissions and will become a supplier to 130 countries and territories. The turnover of this company is estimated at 15 billion euros in the first year.

Renault made the following statement: In Romania, it is expected that the specialized powertrain entity will remain Renault Mécanique Romania (RMR).

Renault and Geely had a collaboration in China (signed in August 2021), for hybrid models, and are also associated in South Korea, because in May Geely bought 34% of Renault Korean Motors. The Samsung plant, owned by Renault in South Korea, will produce thermal engine vehicles based on Volvo architecture from 2024.

The links between Dacia and China are not new

The Dacia Spring, the brand’s first electric car, is produced in China, but there have long been business ties between Dacia and China.

In 1993, when the company had lost many export markets, the rescue came from sending 4,400 cars to China, cash on delivery, said in 2009 the late Constantin Stroe, a man who contributed a lot to the growth of Mioveni’s brand He said there were 17 nightmarish days in which he was afraid that something would happen to the ship; with expensive but uninsured shipping.

Geely and her timid beginnings

Geely was founded in 1986 and started by producing refrigerators, and a few years later decorative materials. In 1994, it started producing motorcycles, becoming one of the most important Chinese companies in the field. Car production began only in 1998 with the Charade model from Daihatsu, the Toyota brand specializing in the production of small-class cars.

Geely has launched models in China with at least interesting names, such as Beauty Leopard or Freedom Cruiser. In 2003 Geely started exporting cars and in 2005 became the first Chinese brand to exhibit at the Frankfurt Motor Show. In 2006, Geely also exhibited for the first time in Detroit, which shows that it has global ambitions.

However, like other Chinese companies, Geely has not shied away from plagiarism scandals. In April 2009, at the Shanghai Motor Show, the Chinese presented the GE model, a copy of the famous Rolls Royce Phantom. The Chinese said they were ‘reinventing the classic model’ but making it available to more people as it would cost around £30,000.

The Geely brand was officially launched in Romania in April 2007, with two sedans: CK, with prices starting at €7,730 including VAT, and MK, starting at around €10,400. Both had Euro 3 engines then.

Geely will return to the EU this year, but it has never had strong sales, with official EU figures showing it never sold more than 400 cars under its own brand in a year .

Geely and its entry into the “big leagues” thanks to Li Shufu

Geely rose to worldwide fame in March 2010 when it acquired the Volvo brand, in which it now owns an 82% stake. Volvo was then part of Ford and was not in a good financial position. Volvo grew a lot under the Volvo “umbrella”, had an ambitious investment budget and electrification plan. The Polestar brand, created in 2017, was also developed with money from Geely, a brand that recently received $1.6 billion in funding from its two main shareholders.

In 2017, Geely took control of the low-production but high-profile Lotus brand. The Chinese have promised to launch an electric SUV and greatly increase annual production.

In 2018, Geely boss Li Shufu took another step by taking a 9.6% stake in Mercedes-Benz Group AG through a company called Tenaciou3 Prospect Investment Limited. Mercedes and Geely have also formed a joint venture in 2020 to further develop the Smart-branded models that will be produced in China.

In September 2022, Li Shufu took a 7.6% stake in Aston Martin and would like even more, but other shareholders are against it. He became a shareholder in Terrafugia, a company that has been building “flying car” prototypes for more than a decade.

According to Forbes, Li Shufu has an estimated fortune of $17.5 billion, ranking 62nd among billionaires in the world. He is 59 and said as a child he was so poor the only toys he had were sand cars.

In 2021, Geely Holding sold more than 2.2 million vehicles globally, including 698,693 by Volvo Cars and 1,328,029 by listed entity Geely Auto Group on the Hong Kong Stock Exchange. Geely Holding has over 120,000 employees.

Why Nissan is not happy that Geely is coming to Renault’s “table”.

The talks between Renault and Geely would probably have been easier had it not been for Nissan’s concerns.

The international press has written in recent weeks that Renault alliance partner Nissan is unhappy that the French will have a close working relationship with Geely. The fear is linked to the fact that Nissan technology can reach the Chinese and the question of technology transfer is a tricky one.

Nissan wants to be sure that its technology is protected, and it wants serious guarantees in this regard. There were already disagreements between Nissan and Renault over how to deal with intellectual property.

The Geely question has also hampered talks on the future of the Renault-Nissan alliance, with Renault boss Luca de Meo refusing to answer questions about the future of the alliance at Tuesday’s conference, saying that he would when holding a conference. and with Nissan bosses.

Renault holds 43% of Nissan’s capital, while Nissan holds 15% of Renault. Several international publications have written that Renault’s stake in Nissan will decrease, possibly even to 15%.

The Carlos Ghosn scandal has “shaken” the alliance in which Nissan bosses said the marque was not well represented, even though it produced more cars than Renault.

Relations have improved in recent years, but Renault bosses want Nissan to become a shareholder in the now-created Ampere electric car division as part of a sweeping overhaul.

Sources: Reuters, La Tribune. Le Figaro, Financial Times, Automotive News

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