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Saudi Aramco to Acquire 10% Stake in HORSE Powertrain

Saudi Aramco has signed definitive agreements to acquire a 10% equity interest in a joint venture between automakers Renault and Geely, according to a news release by Aramco.

French automaker Renault and Chinese firm Geely will each retain 45% ownership in HORSE Powertrain Limited, a London-headquartered venture. The price Aramco will pay at closing, which is subject to customary closing conditions including the receipt of regulatory approvals, will be based on a €7.4bn ($7.93bn) enterprise valuation.

HORSE Powertrain JV

Renault Group and Geely formed HORSE Powertrain Limited on May 31, 2024. It specializes in providing gasoline engines, hybrid systems, and gearboxes for thermal vehicles.

The company has 17 global plants, in addition to 9 industrial customers in 130 countries. It has heavy strategic presence in China, Europe, and Latin America. It is expected to produce about 5 million powertrain unit per year.

Efficient Solutions

The investment aims to elevate Aramco’s contribution to the global energy transition by developing more efficient mobility solutions. Aramco, Renault Group and Geely share the view that the automotive industry will need a mixture of various technologies to back an organized energy and mobility transition worldwide.

Those solutions include highly efficient internal combustion engines (ICEs), transmissions and hybrid powertrains, alternative fuels such as lower-carbon synthetic fuels and lower-carbon hydrogen, in addition to vehicle electrification.

Aramco’s Potential

The agreements also include collaborative efforts between Aramco and Valvoline on technologies, fuels and lubricants to enhance the performance of HORSE Powertrain Limited ICEs.

The mission of HORSE Powertrain Limited is to dominate lower emission next generation technologies. In the light of this, Aramco’s exceptional capabilities, including a global network of R&D centers, can play a major role in developing more sustainable and accessible lower-carbon solutions.

In this regard, Aramco Executive Vice President of Technology and Innovation, Ahmad O. Al Khowaiter, said: “Aramco’s investment is expected to directly contribute to the development and deployment of affordable, efficient, and lower-carbon emission internal combustion engines globally. With Geely and Renault, we plan to leverage our collective expertise and resources to support ground-breaking advances in both engine and fuel technologies.”

He added: “With a strong emphasis on innovation, our goal is to provide solutions that can help reduce transport greenhouse gas emissions while meeting the needs of both vehicle manufacturers and motorists. In securing long-term partnership between Valvoline Global and HORSE Powertrain Limited, Renault Group, and Geely in connection with this investment, we are also demonstrating Aramco’s ability to both create and capture value at the global level.”

Positive Prospects

The CEO of Renault Group, Luca de Meo, said: “Mitigating carbon in the automotive industry won’t be a solo play. It requires the best players to join forces to open new paths and come up with innovative solutions. That is what’s happening today as we welcome Aramco as a strategic partner in HORSE Powertrain Limited. A dream team is born to reinvent the future of ICE and hybrid technologies.”

Similarly, Geely Holding CEO, Daniel Li, said: “Mitigating greenhouse gas emissions will require global synergies, multi-faceted technological solutions, and the sharing of expertise. With Aramco’s support and expertise in fuel technologies, HORSE Powertrain Limited further cements its role as a leader in pioneering low-carbon and carbon-free fuel technology solutions such as methanol and hydrogen.”

The CEO of HORSE Powertrain limited, Matias Giannini, hailed the agreement, saying: “I am delighted that Aramco has joined HORSE Powertrain Limited. Their expertise in fuels and hydrogen makes them a great partner for us to deliver cutting-edge, lower-emission powertrain solutions, driving our industry’s carbon mitigation efforts forward. Together, we will set new benchmarks for innovation in the automotive sector.”

Aramco Deals

In June, Aramco signed non-binding agreements to buy liquified natural gas (LNG) from US-based suppliers Sempra and NextDecade for 20 years.

Earlier this month, the Saudi oil giant completed the secondary public offering of common shares, generating $11.23bn (SAR 42.1bn) in gross proceeds, according to Forbes Middle East. The offering included the sale of 1.54 billion shares, accounting for approximately 0.64% of Aramco’s total issued shares.

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