Geely Holding , Geely Automobile Holdings and Renault Group have signed a non-binding framework agreement to create a new company to develop, manufacture and supply “best in class” hybrid powertrains and “highly efficient” ICE powertrains.

Geely and Renault would hold equal stakes in the new company.

The new company would be a stand alone global supplier of propulsion systems, producing hybrid powertrains and developing no and low emission technology at five R&D centres worldwide.

At launch, the new company was expected to supply multiple customers including Renault, Dacia, Geely Auto, Volvo Cars, Lynk & Co, Proton, plus (via the Alliance) Nissan Motor and Mitsubishi Motors.

In future, the partnership “could” also offer powertrains to third party automakers.

The new company was planned to operate 17 powertrain plants on three continents, employing around 19,000 people in total. It would have a combined capacity of 5m internal combustion, hybrid and plug in hybrid engines and transmissions per year, supplying 130 countries and regions. The new company’s product line and regional footprint could supply 80% of the global ICE market, Renault claimed.

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The move was announced at the Renault Group Capital Market Day in Paris today, at which the group outlined a range of initiatives to speed up its transformation and shared its mid term financial outlook.

CEO Luca de Meo said in a statement: “As Renault Group accelerates with its Renaulution transformation to capture value on the entire new automotive value chain, we are pleased to have agreed plans for an ambitious partnership with Geely to keep developing the ICE and hybrid engine technology which will remain a critical part of the automotive supply chain for decades to come.

“We’ll be able to offer best in class powertrain and electrified solutions to multiple OEM brands worldwide, unleashing the market potential for this low emission technology.”

The framework agreement was expected to lead to formal combination in 2023.