Renault And Geely Sign Partnership Agreement With Aramco For Engine Venture

Aramco has signed a letter of intent to become a potential minority stakeholder in a new powertrain technology company (PWT) to be established by Geely Holding Group (Geely Holding), Geely Automobile Holdings Limited (Geely Auto HK.0175), and Renault Group. The new company will focus on internal combustion engines and hybrid powertrains. Aramco's investment would help the company's growth and contribute to key research and development in synthetic fuels solutions and next-generation hydrogen technologies. Geely and Renault Group are expected to retain equal equity stakes in the new independent entity.

The planned company is intended to be a standalone global supplier with a combined capacity of over five million internal combustion, hybrid, and plug-in hybrid engines and transmissions per year, supplying over 130 countries and regions through a global network of 17 powertrain plants and five R&D centres across three continents.

The letter of intent, according to Mohammed Y. Al Qahtani, Aramco Executive Vice President of Downstream, marks a new milestone in the company's ongoing commitment, and the planned collaboration with Geely and Renault will support the development of powertrains across the automotive industry.

The agreement would make Aramco the first major oil company to invest in the automobile industry, as the rise of electric vehicles threatens to reduce demand for conventional fuels. Aramco announced a collaboration with Hyundai Motor Co last year to research advanced fuels that could be used in hybrid engines to reduce CO2 emissions.

The agreement with Renault continues Geely's pattern of forming alliances to expand beyond China. Geely previously announced a partnership with Mercedes-Benz to develop hybrid gasoline engines and owns a stake in the German automaker.

The new PWT company's announcement comes at a time when the automotive industry is undergoing significant changes, with a shift towards electric and autonomous vehicles. While electric and hybrid vehicles are becoming more popular, they still account for a small portion of new vehicle sales. Internal combustion engines will thus continue to play an important role in the automotive industry for the foreseeable future.