© Reuters. FILE PHOTO: Renault Chief Executive Officer Luca de Meo speaks during the presentation of the Scenic Vision, a prototype hydrogen fuel cell-powered sports utility vehicle (SUV) in Paris, France, May 19, 2022. REUTERS/Gonzalo Fuentes
By Heekyong Yang and Joyce Lee
SEOUL (Reuters) -Renault Chief Executive Luca De Meo said on Tuesday the automaker was looking to find a partner for a carve-out of its combustion-engine business that would bring scale and drive down costs on technology, including hybrids.
De Meo was answering a question about Renault (EPA:)’s discussions with Geely Automobile after touring a factory in South Korea that Renault has been running in a joint-venture with Geely since earlier this year.
“This is the kind of sector or industry where you need to play the game of scale to find synergies, and to reduce user cost,” De Meo told reporters in Seoul. “It is a project that is there to project our combustion engine cars into the future. We need a partner to do this, and we are doing that.”
De Meo said Renault was in talks with the French government over its evolving strategy. “It’s not a matter of authorisation. It’s just an ongoing, continuous conversation (on) different topics we have with one of our main shareholders,” he said.
De Meo had been in Japan over the weekend for a round of talks with Nissan (OTC:) CEO Makoto Uchida that could reshape the terms of their alliance, people with knowledge of the talks said.
Renault and Nissan said on Monday they were in talks about a reset in their partnership that could include the Japanese automaker investing in a new electric vehicle (EV) venture Renault plans to carve out from its business.
Separately, Geely, which owns Volvo Cars and a 9.7% stake in Daimler AG (ETR:), has been talking to Renault about taking a significant and potentially controlling stake in the combustion-engine business that Renault is also looking to spin out, people with knowledge of those talks said.
Geely could not be immediately reached for comment.
Nissan would also have to endorse the plan for Geely to take a large stake in Renault’s gas-engine business, code-named “Horse”, if that included technology developed by Nissan.
Volvo and Geely created a joint-venture under the name Aurobay to shift their own combustion-engine business into a new stand-alone business last year
In May, Renault sold 34% of its South Korean subsidiary, centred on a factory in Busan, to Geely. The two carmakers announced plans to develop and build hybrid vehicles there.
De Meo’s visit to South Korea was the first time he has visited the factory since bringing in Geely as a partner, and it comes with Renault facing an initial deadline of early November to report on its progress in launching its EV unit.
De Meo has said Renault needs new partnerships because of the scale of the investment needed to shift toward battery-powered cars and charging.
Renault is looking to win Nissan as an investor in its new EV venture, which it is setting up alongside a separate combustion engine unit, essentially splitting out the higher-growth and investment-hungry portion of its auto business.
In exchange for investing in the EV venture, Nissan is looking to Renault to reduce its stake in the Japanese automaker, a person familiar with the talks said.
Renault currently owns about 43% of Nissan, which in turn has a 15% stake in its long-term partner with the French state holding another 15%.
Geely, founded by billionaire Li Shufu, ranks seventh in China by sales and stands out for its proactive approach to collaboration with other automakers and for using established brands, including Volvo and Lotus, as it expanded outside its home market.