In order to expand its presence in the transportation industry, Saudi Aramco is close to agreeing to buy a stake in the planned combustion-engine partnership between Zhejiang Geely Holding Group Co and Renault SA.
The largest oil firm in the world will acquire a minor stake, according to anonymous sources. In contrast, Renault and China’s Geely intend to maintain parity. There’s no guarantee that the non-binding agreement will be formalized, sources claim, even though it might be publicized this week. Saudi Aramco, Renault, and Geely spokesmen did not respond.
It would aid Saudi Aramco, a state-controlled company, in expanding in a sector heading toward battery power. While the market for completely electric vehicles is growing, combustion-engine and plug-in hybrid vehicles will continue to be in demand, particularly in developing nations. The world’s largest oil company is already attempting to create technology that can lower motor emissions and boost fuel economy.
Let’s examine the deeper details of the mutual plan
Renault informed investors last year that the joint venture between Geely and Renault will feature 17 plants, 19,000 people; research centers in Europe, China, and South America; considerable synergies in development spending, and fixed assets. Because the project will also provide technology for cleaner fuels, Renault has been searching for an energy business to work with.
In an effort to increase profitability, Renault is reforming its organizational structure. It announced in November that it is merging its combustion assets with those of Geely to gain scale. Due to expense measures, the producer of the Dacia and Clio vehicles has more money to invest in battery-powered vehicles and a distinct carveout of its EV company.
The partnership expands Geely and its founder Li Shufu’s network of automotive investments in Europe. It already includes stakes in Mercedes-Benz AG, Aston Martin Lagonda Global Holdings Plc, and Lotus.
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