Renault-Nissan to Develop Electric Cars in China with Dongfeng Motor

The Japanese car maker, Nissan Motor Company Ltd., and its French alliance partner, Renault SA, announced on Tuesday that they are setting up a new joint-venture, or JV, with a Chinese state-owned partner, Dongfeng Motor Group, to design, develop, and sell battery-powered automobiles in China that meets its tighter emission rule. This adds to a series of tie-ups between global auto brands and local partners in the biggest electric vehicle market.

Joint Venture with Dongfeng

The JV, which is called eGT New Energy Automotive, will be based in Shiyan, Hubei Province, and EVs will be produced at the Dongfeng plant which has a capacity of 120,000 vehicles a year. Moreover, it will let Renault and Nissan receive a 25% share each, while Dongfeng will gain 50%. Production of the new EVs is expected to take place in 2019.

The venture Dongfeng Motor Corp. aims to design an electric vehicle based on a sport-utility vehicle platform shared by the alliance, the companies said in a statement. The car makers’ move comes as global automakers tap into a boom for such cleaner ‘new energy’ vehicles in China and gear up to meet its anticipated strict plug-in quotas. Global automakers are investing greatly to develop electric vehicles in China, in response to increasing demand and government pressure on the industry to boost technology development.

The JV aims to leverage the core competencies of each partner and harness the full potential of the Renault-Nissan Alliance EV leadership.

“The establishment of the new joint venture with Dongfeng confirms our common commitment to develop competitive electric vehicles for the Chinese market,” said Carlos Ghosn, Chairman and CEO of Renault-Nissan Alliance.

Renault SA and Nissan  Motor Corp. have a wide-ranging alliance to share technology and production that also includes Mitsubishi Motors Corp. and has more limited ties with other auto brands.

While Dongfeng assembles vehicles for Nissan, Kia, and other foreign brands, and owns a share of France’s PSA Peugeot Citroen.

“This project is the result of a joint effort to develop electric vehicles for the Chinese market, by the ‘Golden Triangle’ formed by Dongfeng, Renault and Nissan, with an innovative business model. We expect to meet the transformation trend of the market in China; where cars are becoming lighter, electric, intelligent, interconnected, and shared,” said Zhu Yanfeng, Donfeng Chairman, in response to the partnership.

Electric Vehicle in China

In 2016, 256, 879 electric vehicles were sold in China, an increase of 121 percent over 2015. In the first seven months of 2017, production of EVs reached 223,000 units and sales 204,000 units, indicating a rise of 37.8% and 33.6% respectively.

Chinese planners find electric vehicles as a favorable industry and an astute way to clean up smog-choked cities. They have backed up sales with subsidies to buyers, while a proposed quote system will require automakers to meet targets for EV production or purchase credits from competitors that do.

Other Automakers EV Plan in China

Tesla, Daimler AG, and General Motors have already announced plans for making electric vehicles in China, which wants electric and plug-in hybrid cars to make up at least a fifth of the country’s auto sales by 2015.

Last week, Ford Motor Co. announced it looked at setting up an electric vehicle venture with Anhui Zotye Automobile Co. to produce EVs.

In May, Volkswagen AG received approval for a new venture with Anhui Jianghuai Automobile Group to produce electric cars. Daimler AG and BMW also have electric car brands under their partnership with BYD Co. and Brilliance China Automobile Holdings Ltd.

Want to get updated on the latest news about the stock market? Subscribe now at Trade12. We will let you know the latest happenings about forex, commodities and economies.