Aramco, Renault and Geely set up powertrain joint venture
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Saudi Aramco plans to set up powertrain JV with Renault, Geely

Saudi Aramco plans to set up powertrain JV with Renault, Geely

Aramco will be a minority stakeholder in the venture while Geely and Renault are expected to retain equal equity stakes

Aramco, Geely and Renault venture

Saudi Aramco has signed a deal with French automaker Renault and China’s Geely Automobile Holdings to set up a new powertrain venture in which the state-owned energy company will be “a potential minority stakeholder”.

Geely and Renault are expected to retain equal equity stakes in the joint venture and the new company will be dedicated to internal combustion and hybrid powertrain technologies, said Aramco in a statement.

The new company is set to be one of the biggest suppliers of engines with a global network of 17 powertrain plants, five research and development (R&D) centres across three continents and a combined capacity of more than five million hybrid and plug-in hybrid engines and transmissions per year.

“Our planned collaboration with Geely and Renault would support the development of powertrains across the automotive industry, and aligns with our broader efforts across our global operations,” said Mohammed Y. Al Qahtani, Aramco executive vice president of Downstream.

Aramco, Renault and Geely said the venture, which does not have a name yet, will supply more than 130 countries and regions.

Cars with internal combustion engines and plug-in hybrids are expected to witness an increase in demand in the coming years, especially in developing countries, though the sales of fully electric vehicles are gaining momentum.

The joint venture, which will also develop technologies for cleaner fuels, is expected to help Aramco to grow in an industry shifting to battery power. The state-owned oil major is already working to develop technology that can reduce motor emissions and improve fuel efficiency.

Read: Aramco to set up $1.5bn sustainability fund

Last October, Aramco said it was setting up a $1.5bn sustainability fund to invest in technology that can support a stable and inclusive energy transition which will be under the management of its venture capital arm.

Aramco’s investments

In other news, Aramco said it has completed the acquisition of Valvoline’s global products business in a deal valued at $2.65bn. The acquisition of Valvoline Global Products (VPG), which was first announced in August 2022, will allow Aramco to bolster its global base oils production and expand its research and development activities.

The energy giant will own the Valvoline brand for all products used globally as part of the agreement, while the American firm will own the Valvoline brand for all retail services purposes globally, excluding China and some countries in the Middle East and North Africa region.

Read: Aramco completes acquisition of Valvoline’s global products business

Meanwhile, Aramco is among the biggest listed companies in Saudi Arabia that are spearheading several investments as part of the government’s broader strategy to expand their portfolios to generate revenue to fund its economic diversification programs.

On Wednesday, the kingdom outlined plans for $51bn (SAR192bn) of investments by local companies including Aramco and mining giant Maaden under the government ‘Shareek’ programme which was launched in March 2021.

The first wave of projects will have a strategic impact on several economic sectors in the kingdom, encompassing investments worth SAR192.4bn.

The projects are expected to contribute around SAR467bn to Saudi Arabia’s GDP and create more than 64,000 jobs by 2040 while as much as SAR120.2bn will be invested by the country’s biggest listed companies by 2030.

With a market capitalisation of SAR6.9tn as of March 2, Aramco reported a 39 per cent increase in Q3 2022 net income to $42.4bn compared to $30.4bn a year earlier while the company’s free cash flows surged to $45bn from $28.7bn.

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