The European Investment Bank is preparing to inject €300 million into a €672 million hydrogen engine project led by Horse Technologies, the joint venture between Renault, Geely, and Aramco.
The initiative places Spain—specifically the Valladolid plant—at the center of Europe’s pivot toward hydrogen internal combustion engines (ICEs), amid rising pressure to decarbonize transport without fully abandoning combustion systems.
Unlike fuel cells, hydrogen ICEs rely on modified conventional engines to burn hydrogen, potentially offering a transition solution for sectors where electrification is technically or economically unfeasible in the short term.
The hydrogen-powered engine under development in Valladolid is a flagship project for Horse Powertrain Limited, which was formalized in 2023 with a corporate structure that allocates 45% ownership each to Renault and Geely, and 10% to Saudi Aramco. The inclusion of Aramco, whose interest lies in synthetic fuels and combustion innovation, reflects a diversified approach to decarbonization strategies that hedge against battery-dominant futures.
Although hydrogen ICEs are not new, their commercial maturity remains limited due to a lack of refueling infrastructure and unresolved efficiency challenges. Industry tests show hydrogen ICEs emit near-zero CO₂, but they still release NOₓ under certain operating conditions. This creates regulatory complications in markets moving toward zero-emission definitions that exclude combustion-based technologies, regardless of fuel type.
Valladolid’s selection as the manufacturing hub signals a broader recalibration of Spain’s industrial role in the automotive sector. Already home to eight production sites and R&D centers under Horse Technologies, Spain is being positioned as the nucleus of the company’s hydrogen engine development, even as hydrogen fueling stations across the country remain sparse.
The EIB’s expected €300 million contribution—nearly half of the total project cost—highlights Europe’s dual strategy: supporting low-carbon combustion technologies while pursuing full electrification under separate policy tracks. The investment will fund not only R&D but also capital expenditures for new equipment, reinforcing Valladolid’s position in the joint venture’s long-term powertrain plans.
Supply Chain and Market Constraints
Despite the clear financial backing, challenges remain. Hydrogen ICEs face significant commercial constraints due to the minimal deployment of hydrogen refueling stations across Europe. As of early 2025, fewer than 300 public hydrogen stations operate in the EU, and most are geared toward fuel-cell electric vehicles (FCEVs) rather than hydrogen combustion.
In addition, while hydrogen ICEs may offer cost advantages in heavy-duty or legacy fleet segments, their overall efficiency is lower than FCEVs or battery electric vehicles. This technical trade-off means uptake will likely remain constrained to niche markets unless infrastructure expands and regulations adapt to include combustion-based hydrogen systems in “zero-emission” classifications.
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