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Saudi money tipped into Renault-Geely ICE JV

NOT HORSING AROUND: The 10 per cent contribution from Aramco will aid Renault-Geely in developing new ICE and HEV powertrain technologies.

Combustion, hybrid powertrains focus of Aramco and Renault-Geely ‘Horse’ joint venture

4 Jul 2024

THE world’s biggest oil company, and by revenue the world’s second largest company, Saudi-owned Aramco, has taken a 10 per cent share in Renault-Geely’s combustion engine joint venture Horse Powertrain.


The Saudi buy-in was welcomed by Renault Group CEO Luca de Meo who described the JV partnership as a “dream team” but the 10 per cent share was less than a controlling interest Aramco sought at the start of negotiations last year.


According to a statement released by Renault-Geely and reported in media outlet Automotive News Europe (ANE) the transaction values Horse Powertrain at about €7.4 billion ($US7.9 billion, $A11.8 billion) with Renault and Geely retaining roughly 45 per cent apiece.


The timely JV comes in response to fluctuating market conditions in the new car space and other considerations, with the pair announcing plans last year to make combustion engines and hybrid powertrains.


Aramco was involved early on signing a letter of intent for its planned buy-in and will bring expertise in synthetic fuels to the business among other inputs.


Horse Powertrain was established mid-2023 and is billed by Renault-Geely as a “new powertrain technology company ready to reinvent combustion engine technology leading the development, production and supply of next generation low-emission hybrid and thermal powertrains”.


Horse brings together Renault Group’s industrial know-how and assets in advanced hybrid and low-emission powertrains and comprises eight engine and transmission mechanical manufacturers and three R&D centres.


It is headquartered in Madrid (Spain), with operations in seven countries: Argentina, Brazil, Chile, Portugal, Romania, Spain and Turkey.


Renault CEO Luca de Meo said of the just finalised deal, “Decarbonising the automotive industry won’t be a solo play. It requires the best players to join forces to open new paths and come up with innovative solutions.”


“A dream team is born to reinvent the future of ICE and hybrid technologies,” he added.


In its report, ANE said Aramco is among energy providers and automakers doing research in synthetic fuels, which could, if sustainably produced, provide a low- or zero-emissions solution for existing and future combustion engines.


The EU has pledged to create an as-yet-undefined exception for the fuels in its zero-emissions goals.


In addition to links between Renault-Geely and Aramco, the agreement ties Aramco with oil company, Valvoline, on technologies, fuels and lubricants to improve the performance of Horse engines.


“Aramco’s stake in the thermal engine joint venture could stabilize investments in legacy automakers, providing a safety net amidst the electric shift,” ANE reported.


It is seen as a timely investment when the global electric-vehicle market appears to have stalled struggling with rising production expenses and buyer indifference in many countries apart from China which subsidises EV sales.


In the background of Aramco’s Horse buy-in, the state-owned oil company earlier this month sold stock raising $11.2 billion for the Saudi administration to help Crown Prince Mohammed bin Salman’s ambitious expansion plans that include a revamp of the economy through investments in sports, artificial intelligence, tourism and the desert project of Neom.


ANE says Horse Powertrain will (eventually) have 17 plants and 19,000 employees and the capacity to supply more than five million internal combustion, hybrid and plug-in hybrid engines annually equating to most of the world’s global hybrid and internal combustion engine market.


Various deals with companies outside the JV have also been signed in preparation for the development and manufacturing of new gen’ combustion and hybrid powertrains to commence in earnest.


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