Privately owned Geely has told the Malaysian government that it plans to build onto its existing Proton manufacturing facilities to create the largest vehicle manufacturing complex in the ASEAN region. It has earmarked $A15 billion for the project.

The move is part of a plan where Geely wants Proton to be in the top three car makers by volume in the ASEAN region but open the way for production of Geely’s other brands. 

It also gives access to right hand drive Geely car production at Proton which would open the way to Geely being able to launch in markets like Australia, India, South Africa and the UK.

But the move has come at a cost to Thailand. 

It was expected that Geely was going to invest $A500 million in a Thai assembly plant for EVs with a capacity of 100,000 cars a year. But this project appears to have been cancelled and moved to the Proton manufacturing complex in Malaysia.

Analysts say that Geely is already investing in a new engine plant as well as new body assembly line to give Proton the capacity to assemble Geely-sourced products such as the X50, X70 and X90 as well as EVs. The EV market is expected to boom in Malaysia as new rules will eliminate import duty and other taxes by 2025.

The announcement of the auto complex in Malaysia comes just weeks after Geely and Renault Group announced a 50-50 $A11 billion joint venture to build new generation ICE and hybrid powertrains, a move that indicates the view by some major car makers that there will still be room for ICE and hybrid powertrains going forward.

The new company will join up 17 engine plants, five R&D centres and a new head office in the UK. It will have facilities in three continents. It will employ 19,000 people.

At launch, the new company is expected to supply a host of car makers including Renault Group, Geely Auto, Volvo Cars, Proton, Nissan, Mitsubishi Motors and will include Italian engine developer, PUNCH Torino.The joint venture partners also plan to offer R&D services to provide unique powertrains to third-party car brands. It said it “will welcome partners to further strengthen the value chain”.

The joint venture said that taking into account the various powertrains it plans to have in its product portfolio, and considering the regional footprint of markets still selling ICE vehicles, it could cater to 80 per cent of the global ICE and hybrid market.

The combined budget for the JV is about $A11 billion. This means Geely will be tipping in $A5.5 billion on top of the $A15 billion it has earmarked for the Malaysian auto industrial complex. 

The Saudi oil company, Aramco, is considering an investment in the new company which will be conducting research and development into new synthetic fuels and next-generation hydrogen technologies. 

The company says the synthetic fuels including e-fuels and hydrogen can not only power the new vehicles of the future but can be used for the ICE vehicles on the road today.Renault Group and Geely will transfer intellectual property to the operational centres enabling the company “to be fully autonomous in developing future powertrain technologies capable of addressing all market expectations”. 

The joint venture will be jointly led by Renault Group and Geely, with equal board members.

Subject to applicable laws and regulations, Geely Auto and Renault will enter into a long-term procurement agreement from the joint venture for ICE, hybrid and plug-in hybrid engine and transmissions for passenger vehicles. 

In addition, Renault will buy powertrains from the joint venture for light commercial vehicles as well as the development of hybrid batteries.

It expects to have a production capacity of 5 million engines a year.

By John Mellor