Aramco to buy 10% stake in Renault-Geely thermal engines venture

FILE PHOTO: Saudi Aramco logo is pictured at the oil facility in Abqaiq, Saudi Arabia October 12, 2019. REUTERS/Maxim Shemetov/File Photo

By Rishav Chatterjee

(Reuters) -Oil producer Saudi Aramco will buy a 10% stake in a thermal engines joint venture between French carmaker Renault and Chinese automaker Geely, the companies said on Friday, valuing the business at 7.40 billion euros ($7.93 billion).

Geely and Renault will own around 45% each of the powertrain venture, called Horse Powertrain, which will supply gasoline engines, hybrid systems and gearboxes for thermal vehicles.

Reuters reported on Thursday that the state-owned company was close to buying a 10% stake in the venture.

Renault CEO Luca de Meo described the deal in a statement as creating a "dream team" that would "reinvent" the future of combustion-engine and hybrid technologies.

"Aramco's stake in the thermal engine joint venture could stabilize investments in legacy automakers, providing a safety net amidst the electric shift," investor platform Finimize wrote, ahead of the official announcement.

The investment comes as the global electric-vehicle market struggles with worries around demand and rising production expenses.

The European Commission this month said it would impose extra duties of up to 38.1% on imported Chinese electric cars from July.

Aramco, which this month raised around $11.2 billion through a secondary share sale, had originally signalled it would buy a 20% stake in Horse Powertrain.

The company signed a letter of intent in March 2023 with a view to possibly becoming a minority shareholder in the venture.

Horse Powertrain was formally established on May 31.

($1 = 0.9334 euros)

(Reporting by Rishav Chatterjee in Bengaluru; Editing by Tasim Zahid, Sriraj Kalluvila and Rod Nickel)