Renault in petrol engines tie-up with China’s Geely

RENAULT is strengthening ties with China despite ongoing Covid disruption in the country and a deepening rift between the West and Beijing.

The French carmaker has agreed a joint venture with Chinese motor manufacturer Geely to make petrol engines.

Renault will hive off its engines and hybrid business into a new company

jointly owned with Geely, which also controls the Lotus and Polestar brands. It is understood the new business will be based in London.

The tie-up will result in Geely and Renault sharing resources across 17 factories, which span Europe, South America and China. The partnership builds on a deal between the two companies struck earlier this year to manufacture hybrid vehicles in South Korea.

Geely is the seventh largest carmaker in China and the largest privately owned automaker, competing with state-controlled rivals. It was founded in 1986 and is owned by Chinese billionaire Li Shufu. It already has strong links to Europe’s auto market as it owns 7pc of Aston Martin and controls Swedish electric car maker Polestar.

The partnership between Renault and Geely comes as Chinese manufacturers face continued disruption from President Xi Jinping’s adherence to his zero-covid policy, which has brought factories to a close for months at a time. The International Monetary Fund expects China to face its slowest growth rate in more than 30 years, partly as a result of continued lockdowns.

Tensions between Western leaders and Beijing are running at their highest levels in decades, with the US imposing export restrictions on businesses and industries trading with China.

The partnership between Renault and Geely was announced as part of a restructure of the French company’s operations. It will be split into five parts and its electric car business, Ampere, will be spun off as a separate company.

Renault hopes the overhaul will help it return to paying a dividend next year after a difficult period when coronavirus shutdowns hampered production.

Renault made a record €8bn (£7bn) loss in 2020 but returned to profit last year on shifting focus to high-end cars.