Renault has launched a new partnership in China as it tries to tap into booming demand for electric cars.
The French carmaker has invested 1 billion yuan ($145 million) for a 50% share in Jianglin Motor Electric Vehicles, the companies said on Wednesday.
The subsidiary of Jianglin Motor sold nearly 500,000 electric vehicles in 2018, making it one of the leading players in China.
Electric vehicle sales have grown rapidly in China on the back of government subsidies and tax incentives. The government wants to encourage the switch to electric to reduce pollution and develop the country's car industry.
In 2018, 1.26 million new-energy vehicles, including electric cars and plug-in hybrids, were sold in China, up 62% from the previous year, according to the China Association of Automobile Manufacturers.
China is already the world's biggest market for electric vehicles. The government wants sales of new energy vehicles to hit 7 million annually by 2025. Subsidies and tax breaks are being phased out but China's biggest cities are starting to ban older gas and diesel cars.
The deal with Jianglin Motor is Renault's fourth partnership in China.
In 2013, the French company partnered with Dongfeng Motor to set up Dongfeng Renault Automobile Company, producing Renault-badged vehicles.
In August 2017, Renault and its global alliance partner Nissan set up an electric car joint venture with Dongfeng Motor, called eGT New Energy Automotive. Later that year, Renault set up a joint venture with Brilliance Auto to manufacture light commercial vehicles.
Renault has set an ambitious target of selling 550,000 vehicles in China by 2020, according to the company's strategic plan released in April. That's more than double its 2018 sales of 216,699 vehicles.
"This partnership in the electric vehicle business with [Jianglin Motor] will support our growth plan in China and our EV capabilities," Francois Provost, senior vice-president and chairman of Renault China, said in a statement.
Qiu Tiangao, chairman for Jianglin Motor, said in a statement that the partnership with Renault will boost the Chinese car maker's overall strength and increase the venture's share in the Chinese electric car market.
In the first half of 2019, new energy vehicle sales grew nearly 50% to 617,000, while total vehicle sales dropped 12.4% to 12.3 million, according the China Association of Automobile Manufacturers.
Competition among foreign players has become fierce since the Chinese government loosened restrictions in 2017 on the number of electric car joint ventures they can take part in.
Since then, Volkswagen, Ford and BMW have set up electric car joint ventures with their local partners.
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