Renault, Geely ink pact with Aramco for engine venture

(Reuters) -Oil giant Saudi Aramco agreed to acquire a minority stake at a new engine company that French car maker Renault SA, and China’s Geely Automobile Holdings Ltd will jointly set up, they announced on Thursday.

Reuters reported January that Aramco had been involved in advanced discussions to purchase a stake up to 20% in a Geely Renault powertrain company. The company would develop and supply internal combustion engine (ICE) and hybrid technology.

They indicated that Geely & Renault will retain equal equity in the new entity. Aramco was not disclosed how much or how large each would invest.

The joint venture will develop more-efficient gasoline engines as well as hybrid systems. This comes at a time where the automotive industry is focused on making the capital-intensive switch to pure electric vehicles.

“This partnership with Aramco will… give it a head start in the race towards ultra-low-emissions ICE powertrain technology,” Luca de Meo is the CEO of Renault.

Renault will focus its efforts on electric cars after separating its internal combustion engine business. This is part the French automaker’s wide restructuring that also includes overhauling its decades old alliance with Nissan Motor Co.

“Aramco’s entry brings to the table unique know-how that will help develop breakthrough innovations in the fields of synthetic fuels and hydrogen,” De Meo said.

Aramco will be the first major oil company to invest in the automotive business. This is because the rise of electric vehicles threatens to reduce demand for conventional fuels.

Aramco announced last year that it had partnered with Hyundai Motor Company to research advanced fuels that could be used to reduce CO2 emissions in hybrid engines.

Geely sees the Renault deal as an extension of its strategy to build partnerships and expand into other countries. Geely has previously announced a partnership with Mercedes-Benz to develop hybrid gasoline engines and owns a stake in the German automaker.

The companies stated that the new company would produce more than 5,000,000 internal combustion, hybrid, and plug-in diesel engines and transmissions each year.

*As an Amazon Associate I earn from qualifying purchases