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Saudi Aramco signed a letter of intent to potentially acquire a minority stake in Renault SA and Zhejiang Geely Holding Group Co.’s planned combustion-engine venture as the oil behemoth seeks to expand into transport technologies.
French carmaker Renault and China-based Geely would retain equal equity stakes in the new project, which will develop internal combustion and hybrid powertrain technologies, the firms said in a joint statement Thursday. Saudi Aramco’s investment would support research and development across synthetic fuels and next-generation hydrogen technologies, they said.
The companies didn’t provide further details about how big their stakes would be, or whether the agreement is binding. Bloomberg News reported the deal earlier this week.
The new venture would help state-controlled Saudi Aramco, the world’s biggest oil company, grow in an industry that’s undergoing a seismic shift toward a battery-powered future. While sales of fully electric vehicles are taking off, combustion-engine and plug-in hybrid autos will still be in demand for years to come, especially in developing countries. The company is already working to develop technology that can reduce motor emissions and improve fuel efficiency.
The new Renault-Geely firm is intended to become a standalone supplier with a combined capacity of over 5 million internal combustion, hybrid and plug-in hybrid engines, a network of 17 powertrain plants and five research and development centers, according to the statement.
