By Norihiko Shirouzu

BEIJING, (Reuters) – Geely Holding & France’s Renault According to three sources familiar with this matter, the Chinese and American automakers are expected to announce soon a partnership to jointly manufacture hybrid automobiles in South Korea. The deal could also allow for duty-free exports to the United States.

Renault will be able to strengthen its South Korean business and expand its Asia presence with the joint venture (JV), which has been in place since January.

The sources claimed that Renault will enter China this year after exiting China. It will then create a brand, a plug-in hybrid, to gain access back to the largest auto market in the world. This will be jointly managed by Geely and Renault.

Geely expects to collaborate with Renault in order to create a new range of green vehicles that uses Geely’s Compact Modular Architecture. (CMA) is Geely’s midsize vehicle underbody, which was shared with Volvo as well as its supply chain and manufacturing facilities.

Sources said that Renault would focus on the design and sales of vehicles, as well as marketing its brand new in China.

Geely could gain a foothold in South Korea through the agreement. He also has access to Renault’s South Korean assembly plant. Renault is a locally owned brand that shares a Samsung Group Unit (KS:).

A model Geely plans to produce at Renault’s plant in the southeastern South Korean port city of Busan is the Lynk & Co 01 sport-utility vehicle, one of the sources said.

The Lynk & Co 01 model is currently available in three powertrain options, gasoline-fuelled, conventional gasoline-electric hybrid, and plug-in electric hybrid.

Although it was unclear which model the company would produce in Busan at this time, one source said that the hybrid and gasoline-powered models will be made in South Korea.

Sources said that the goal is to produce certain Lynk hybrid cars in South Korea. This would imply that the companies will coordinate local parts.

One source said that Geely could gain “backdoor access” to the U.S. market as a result of the deal.

The Chinese automaker is looking at the possibility of taking advantage of South Korea’s free-trade agreement with the United States and export its Lynk & Co vehicles to the world’s No.2 auto market, two of the sources said.

It comes as Chinese automakers like Chery Automobile are abandoning plans to enter the United States due to the COVID-19 pandemic, Sino-U.S tensions and other factors.

RENAULT SAMSUNG VERSIONS LYNK CARS

In South Korea, Renault will try to shore up its business by manufacturing Renault Samsung versions of certain Lynk & Co cars in its Busan plant, the three sources said.

Renault Samsung Motors has had a difficult time in recent years, the company Renault owns with an 80% share. Exports and sales have nearly halved between 2017 and 116,000 cars last year. The November 2017 sales totalled 120,000 automobiles.

China’s Renault and Nissan are the global allies of the Motor Co.

Renault and Nissan are also long-standing partners in designing, producing and marketing cars together. This allows them to share components and reduce other manufacturing costs.

At the time, it was not clear how Renault’s partnership to Geely would affect Renault-Nissan.