BEIJING, December 21 (TMTPOST) — Chinese automaker Geely and French carmaker Renault will soon announce a joint venture to produce hybrid cars in South Korea and potentially export cars duty-free to the United States, Reuters reported, quoting three sources familiar with the matter.

The sources said that Zhejiang Geely Holding Group and Groupe Renault will soon announce the deal.

The joint venture deal has been under works since early this year and involves joint operations in China, which will help Renault provide support for its struggling business in South Korea and buttress its operations in Asia, Reuters reported.

Geely will work with Renault on a new line of new energy vehicles that adopt the Chinese automaker’s Compact Modular Architecture, a midsize vehicle underbody structure shared by Geely, Volvo and its supply chains and manufacturing facilities in China, the sources said.

Renault will focus on vehicle design, sales and marketing, the sources added.

Source: Visual China

The deal will allow Geely to secure production advantages in South Korea and gain access to its partner’s assembly plant in the country. Renault has been producing and selling cars for over two decades via a local brand with a Samsung subsidiary in South Korea.

In addition, the deal might allow Geely to gain a “backdoor entry” into the U.S. market, one the sources said. South Korea has a free-trade agreement with the United States, which means Geely could export its vehicles to the American market through the joint venture with Renault.

Geely plans to produce its Lynk & Co 01 sport-utility vehicle at Renault’s production base in South Korea, one source said. The Lynk & Co 01 is a 5-door compact crossover SUV, developed in conjunction with Volvo. It is currently available in three powertrain options, gasoline-fuelled, conventional gasoline-electric hybrid, and plug-in electric hybrid.

Geely is a multinational automotive company headquartered in Hangzhou, Zhejiang. Established in 1986, the company sells passenger vehicles under the Geely Auto, Lotus, Lynk & Co, Proton, Volvo, and Polestar brands as well as commercial only vehicles under the London EV Company, Ouling Auto and Yuan Cheng Auto (Farizon Auto) brands. The group sold over 2.4 million cars in 2020.