Aramco partners with Renault and Geely to develop hybrid engines

Saudi Aramco, the flagship oil giant Saudi Arabia, has reached an agreement to take a minority stake in a new technology company planned by French carmaker Renault and China’s Geely Motors.   Traditional combustion engines have a dubious future in the face of the great prospects that lie ahead for electric and hybrid engines because of their greater environmental friendliness and their guaranteed future as clean, renewable energy. Saudi Arabia wants to diversify its economy, historically dependent on its precious oil, and for years has been implementing its Vision 2030 plan focused on developing all kinds of economic sectors to reduce its dependence on oil as its main source of income. Among these sectors is the energy sector and specifically the field of renewable energies.   There has long been talk of electric cars as the great future of the automotive sector, thanks to the long-standing commitment to renewable energies as opposed to hydrocarbons, which are more polluting and have an expiry date. This is also where Saudi Arabia and its commitment through the Saudi state-owned oil company Aramco to the development of hybrid engines comes into play. As reported by Reuters, Aramco is at an advanced stage of talks to acquire a stake of up to 20% in a powertrain technology joint venture previously announced by Geely and Renault. This project is intended to develop internal combustion engines and hybrid technologies. REUTERS/HAMAD I MOHAMMED – Saudi Aramco logo The deal would make Aramco the first major oil producer to invest in the automotive sector, where the expansion of electric and hybrid cars threatens to reduce demand for conventional fuels.  French carmaker Renault and China’s Geely said in a joint statement that the intention is for “Geely and Renault to retain two equal stakes in the new corporation”, but the size of the two shares and the size of Aramco’s investment in the new company were not disclosed.  The new joint venture aims to develop more efficient petrol engines and hybrid systems at a time when much of the automotive industry is focused on the energy transition to more environmentally friendly engines through renewable energy sources.   In this regard, Renault CEO Luca de Meo said he expects this union with Aramco and Geely to reinforce leadership in technology for hybrid internal combustion and electric engines with very low emissions. “Aramco’s involvement with its unique expertise in our business will enhance the development of advanced innovations in the fields of synthetic fuels and hydrogen,” De Meo said, as reported by Al-Arab media.     REUTERS/ALY SONG – The Geely logo is seen at a car dealership in Shanghai, China Already last year, Aramco announced a partnership with Hyundai Motor to study advanced fuels that could be used in hybrid engines to reduce carbon dioxide emissions. Work is therefore continuing along these lines in the Saudi kingdom.   For Geely, the agreement with Renault reinforces its attempts to build partnerships to expand outside China. Geely has previously announced an agreement to develop a hybrid petrol engine with Mercedes-Benz, a German company in which it has a significant stake.   The joint statement from Renault and Geely indicated that the production capacity of the new company resulting from the partnership with Aramco “will amount to more than five million internal combustion engines, hybrid engines, compact hybrid engines and transmissions annually”.  Zhejiang Geely Holding Group Co. commonly known as Geely, is a Chinese automotive company based in Hangzhou, Zhejiang. It owns or is a major shareholder of the Geely, Smart, Mercedes-Benz, Polestar, Volvo, Lynk & Co, Proton, Lotus Cars, and London EV brands.  AFP/FADEL SENNA – Car assembly plant at the Renault-Nissan Tanger car assembly plant in Melloussa, east of the port city of Tangier Meanwhile, Renault is the leading French manufacturer of cars, commercial vehicles and even racing cars. It is the spin-off brand from the founding of Groupe Renault, an automotive conglomerate that also includes in its shareholding the Alpine (with 100%), Dacia (99.43%) and Samsung (80.1%) brands, as well as being a majority member of the global Renault-Nissan-Mitsubishi alliance (44%).  The level of these two companies, in conjunction with Aramco, considered the world’s largest oil company, is a measure of the strategic partnership between these business and financial giants.   The announcement of this partnership came as Saudi Arabia launched an investment plan of more than $51 billion led by Aramco and SABIC Chemicals, as part of an initiative backed by the Saudi government as part of the Vision 2030 strategy and economic diversification, in this case in the energy and chemicals sector.   The bet is clear, the new joint venture aims to develop more efficient gasoline engines and hybrid systems at a time when most of the automotive industry is focused on switching to electric vehicles. A bet on the future.