In a significant move following their framework agreement, Geely and Renault have solidified their partnership by signing a binding joint venture agreement for the establishment of a new combustion engine company.
However, the world’s largest oil company, Aramco, has not yet entered the picture, despite previously signing a letter of intent to contribute to the research and development of hydrogen and biofuel propulsion solutions. This hesitation from Aramco has caused uncertainty and potential hesitation for other investments in the new company, according to sources.
Aramco, which entered into a letter of intent with Renault Group and Geely on March 2, 2023, is still evaluating its participation in the future engine research project and has not confirmed its shareholding percentage. Currently, the joint venture is divided equally between the French and Chinese partners, with a 50% stake each.
If Aramco’s investment becomes effective, it will provide vital support for the company’s growth and contribute to the research and development of hydrogen propulsion solutions and synthetic fuels for next-generation engines. Synthetic fuels, including e-fuels, and hydrogen are seen as part of the solution for decarbonizing the automotive industry, including existing internal combustion engine vehicles.
The Future of Mobility
By uniting with Aramco, Renault and Geely aim to sustain their combustion engine business, including diesel, gasoline, and hybrid vehicles, in Europe and beyond. Their focus will be on the development of biofuels, such as e-fuels, which Germany considers as a key solution for decarbonizing the automotive sector, as well as the aviation and maritime industries.
This solution merely requires the production of this “green gold” without the need for significant infrastructure changes or vehicle modifications. Other companies, including Spanish firms Repsol and Cepsa, have also shown interest in this area.
Introducing “Horse”
The newly merged company resulting from the collaboration between Renault Group and Geely will encompass 17 engine and gearbox manufacturing plants, including two in Spain (Valladolid and Seville), and five research and development centers, with one in Valladolid that has recently undergone expansion through the hiring of new engineers. With operations spanning three continents and employing 19,000 individuals, the facilities will supply various companies such as Renault Group, Geely Auto, Volvo Cars, Proton, Nissan, Mitsubishi Motors Company, and PUNCH Torino.
The significance of this company to the automotive sector is profound. With a complementary product portfolio and a strong regional presence, the joint venture, known as “Horse,” could provide solutions for 80% of the global market for internal combustion engines and hybrid engines. In the future, this portfolio could be expanded to include hydrogen and biofuel propulsion solutions.
