Geely and Renault will invest up to 7 billion euros ($7.71 billion) in a new equally held joint venture to develop gasoline engines and hybrid technology for automobiles, the French automaker said in a statement.
The JV is aimed at manufacturing more efficient internal combustion engines and hybrid systems at a time when the focus of much of the automobile industry has been on the capital-intensive transition to full-electric vehicles.
The initial organization will have two operational centers: Madrid for Renault and Hangzhou Bay for Geely. An executive team will be based in the headquarters of the new company, which is intended to be established in the U.K.
Renault said last week that it had begun operations at its internal-combustion operation, known as Horse.
"We are pleased to be embarking on this journey to become a global leader in hybrid technologies, providing low-emission solutions for automakers around the world," said Eric Li, Geely Holding Group chairman.
The new company will employ 19,000 people at 17 engine plants and five research and development hubs, Renault said.
At launch, it is expected to supply to multiple industrial customers including Renault, Geely, Volvo, Proton, Nissan, Mitsubishi Motors, and PUNCH Torino.
The joint venture will also be capable of providing powertrain technologies to third-party car brands and "will welcome partners to further strengthen the value chain," the statement said.
The JV aims to have an annual production capacity of up to five million internal combustion, hybrid and plug-in hybrid engines and transmissions, Renault said.
Reuters reported in March that the new venture will see 15 billion euros ($16.53 billion) in annual revenue.
Saudi Aramco, which signed a letter of intent with Renault and Geely in March, is evaluating a strategic investment in the new company, Renault said.
The Saudi oil producer has been involved in advanced discussions to take a stake of up to 20 percent in the JV, sources said earlier this year.
Big oil companies have worked with automakers to develop sustainable fuels and hydrogen engines in recent years. But a deal here would make Aramco the first major oil producer to invest in the car business.
The joint venture is expected to be launched in the second half of 2023.