Oil giant Saudi Aramco has agreed to take up a minority stake in a powertrain technology engine firm that China's Geely Automobile Holdings and French car maker Renault Group plan to develop jointly.
The new company will focus on internal combustion and hybrid powertrain technologies, Aramaco announced in a statement Thursday, as the rise of electric cars imperils to hamper fuel demand.
Aramco said its capital would contribute to research and development across synthetic fuels solutions, as well as next-generation hydrogen technologies and support the company's overall growth.
Geely and Renault will keep an equal equity stake in the new entity. However, the statement did not specify how much each would own nor how much Aramco would invest.
However, in January, Reuters said that Renault and Geely were working to finalize the deal that would make the Saudi oil producer take a stake of up to 20%, citing three people with knowledge of the talks. The investment by Aramco would reportedly leave Renault and Geely with 40% each in the powertrain engine firm.
The new joint venture seeks to develop gasoline engines and hybrid systems at a time when most firms in the automobile industry are exclusively investing in the swift transition to electric vehicles (EVs).
"This partnership with Aramco will... give it a head start in the race towards ultra-low-emissions ICE powertrain technology," Renault CEO Luca de Meo said in the statement. "Aramco’s entry brings to the table unique know-how that will help develop breakthrough innovations in the fields of synthetic fuels and hydrogen,” he added.
Saudi Aramco shares traded nearly 1% higher Thursday at $8.49 (SAR 31.85) following the announcement at 1:20 pm GST.
