Aramco to buy 10% stake in Renault and Geely joint venture

The interior of an electric car from Zeekr, a premium brand owned by Chinese car maker Geely. Reuters

Saudi Aramco, through a wholly owned subsidiary, has agreed to buy a 10 per cent equity stake in Horse Powertrain, a joint venture between Renault Group and Chinese car maker Geely, amid efforts to create more sustainable transport solutions.

UK-based Horse Powertrain, which was set up in May, aims to offer hybrid and combustion-based low-emission powertrain solutions – components that transfer energy from the engine to help the car move.

Aramco will acquire the stake in equal parts from Renault and Geely, which will each retain 45 per cent equity stakes, the companies said in a joint statement on Friday.

The price to be paid by Aramco at closing, which is subject to closing conditions and regulatory approvals, will be based on a €7.4 billion ($7.9 billion) enterprise valuation, they said.

“Aramco’s investment is expected to directly contribute to the development and deployment of affordable, efficient and lower-carbon emission internal combustion engines globally,” said Ahmad Al Khowaiter, Aramco's executive vice president of technology and innovation.

“Our goal is to provide solutions that can help reduce transport greenhouse gas emissions while meeting the needs of both vehicle manufacturers and motorists.”

Saudi Aramco, the world’s largest oil-exporting company, is working on the development of sustainable fuels and is signing partnerships to help reduce global transport emissions.

The company aims to achieve net-zero Scope 1 and Scope 2 emissions by 2050.

In 2022, it also signed an agreement with Formula One’s Aston Martin for the development of internal combustion engines, sustainable fuels and advanced lubricants to lower emissions in racing cars.

Horse Powertrain, which has 17 global plants and nine industrial customers including vehicle manufacturers, expects to soon have an annual production of five million powertrain units.

It aims to create all types of powertrain solutions – full hybrids and long-range plug-in hybrids as well as internal combustion engines (ICE) that use alternative fuels such as ethanol, methanol, LPG, CNG and hydrogen.

The automotive industry will require a combination of various technologies, including highly efficient ICE, transmissions and hybrid powertrains, alternative fuels such as lower-carbon synthetic fuels and lower-carbon hydrogen, as well as vehicle electrification to support an “orderly energy and mobility transition around the world”, Aramco, Renault Group and Geely said.

The latest agreement also includes collaboration arrangements for Aramco and Valvoline on technologies, fuels and lubricants to collectively improve the performance of Horse Powertrain ICE.

“Mitigating carbon in the automotive industry won’t be a solo play,” said Luca de Meo, Renault Group's chief executive.

The deal will allow all three companies to “reinvent the future of ICE and hybrid technologies”, he said.