The Renault-Nissan alliance has become the latest global car company to tie up with a Chinese manufacturer to develop battery-powered vehicles.
The French-Japanese business is joining forces with China’s Dongfeng Motor Group to form eGT New Energy Automotive, a 50:50 joint venture.
Already the world’s largest car market with 28m sales last year, China also leads in electric vehicles with 256,000 of them sold last year in the country.
As the Beijing government tries to improve air quality in the country’s congested cities, electric vehicles are in huge demand, with 204,000 sold in the first seven months of the year, up a third on the same point a year ago. The state is also offering subsidies and other incentives to companies in the sector as part of its pro-electric stance.
Strength of demand in China means global car makers are turning to the country as an ideal place to develop new electric vehicles, with the government’s support for the technology adding impetus.
The first car from eGT will use an existing small SUV platform from Renault-Nissan, as well as the group’s design and and electric vehicle technology, with low cost manufacturing from Dongfeng.
Working out of Dongfeng’s plant in Shiyan in central China, eGT expects to begin production in 2019 with an annual production capacity of 120,000 vehicles.
“The establishment of the new joint venture confirms our common commitment to develop competitive electric vehicles for the Chinese market,” said Carlos Ghosn, boss of Renault-Nissan. “We are confident to meet the expectations of the Chinese customers and to strengthen our global electric vehicle leadership position.”
The joint venture follows last week’s announcement by Ford that it is partnering with Anhui Zotye Automotive in a similar arrangement. As it revealed the tie-up, Ford predicted that demand for electric vehicles in China would hit 6m a year by 2025.
In May, Volkswagen Group, the world’s largest car company with annual sales of 10m vehicles, revealed it had also formed a joint venture with Anhui Jianghuai Automobile to enter what it described as the “hotly contested Chinese mass market”.
“The market is growing for this kind of vehicle in China and is being encouraged by the government there as it tries to clean up its cities,” said Ian Fletcher, principal automotive analyst with IHS Markit. “Western companies want to be in such a big market and the only way to get access is to partner up with a local company.”
Incentives from Beijing which are helping lure Western companies are also expected to pay dividends in the long run.
“This is also about creating an element of market leadership for China,” said Mr Fletcher. “Ultimately, they are hoping to get to a stage where they are exporting a lot of their technology.”
In the past, Western companies have been wary of partnerships with Chinese companies for fear their technology will be copied or stolen, with the foreign companies being pushed out after initial contracts have expired. However, the level of support from Beijing is seen as easing these concerns.
Professor David Bailey, an automotive industry expert at Aston University, added: “This comes as no surprise. There are significant state incentives to encourage take up of electric vehicles and the government wants to develop an indigenous electric vehicle industry and supply chain as part of its industrial policy.
“Whether its Western firms partnering with China firms to build in China, or Chinese brands like Geely and Shanghai acquiring Western brands, in auto terms, the Chinese are very much coming.”