Renault-Nissan to Set Up EV Venture With Dongfeng in China

The Renault-Nissan alliance increased its bets on China’s electric-vehicle market, the world’s biggest, by forming a new venture to design battery-powered automobiles that meet the country’s tighter emissions rule.

Renault SA and Nissan Motor Co. will each hold 25 percent of eGT New Energy Automotive Co., with Dongfeng Motor Group Co. holding the rest, the automobile alliance said in a statement Tuesday, without providing investment details. The partners will design a new EV based on a small sport utility vehicle platform developed by the alliance, to be produced by Dongfeng, it said. The Chinese company currently makes Kadjar SUVs with Renault and Teana sedans with Nissan in the country.

Automakers are accelerating their investments into electric vehicles to meet stricter emission and fuel-economy rules set to take effect in major markets. China is implementing a cap-and-trade framework next year that will penalize carmakers that don’t meet fleet-based limits through fines or purchase of credits.

Wuhan, Hubei-based Dongfeng acquired a 14 percent stake in Peugeot SA in 2014 and makes Aircross SUVs and Picasso sedans under the Citroen nameplate. It also partners with Honda Motor Co. and Kia Motors Corp. to make Civic and KX Cross cars in China, respectively.

Last week, Ford Motor Co. said it will explore setting up a 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 partnerships with BYD Co. and Brilliance China Automotive Holdings Ltd.

China’s Dominance

Nissan will start selling an electric car based on Renault’s Kwid model in China in 2019, with a price of about $8,000, Renault-Nissan alliance Chairman Carlos Ghosn said in interviews earlier this year. The Japanese carmaker has struggled to sell the Leaf electric car, sold as the Venucia e30, in the country since 2014 mainly because its price was too high compared with most locally made EVs. It this month sold its battery subsidiary Automotive Energy Supply Corp. to Chinese private equity firm GSR Capital for about $1 billion.

The three-way alliance of Renault, Nissan and Mitsubishi Motors is the world’s leading electric car maker for the mass-market segment, with cumulative sales of models including Leaf, Renault’s Zoe and Mitsubishi’s i-Miev topping 481,000 units as of the end of June.

China scooped the six top slots in a global index of electric vehicle manufacturers in a sign its strategy to develop the sector may be making headway. BYD, Jiangling Motors Corp. and BAIC Motor Corp. led a group whose scores were between double and more than eight times as high as scores for European and Japanese automakers. U.S. car makers did not make the top ten.

The Chinese government plans to increase the annual output of new-energy vehicles — its term for battery-electric vehicles, plug-in hybrids and fuel cell vehicles — to 2 million units by 2020. Such automobiles are expected to make up more than one fifth of the total sales by 2025, according to the latest auto industry plan released by the Ministry of Industry and Information Technology.

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