Aramco finally confirms its alliance with Renault and Geely. The Saudi oil giant formalized this Friday its entry into the capital of Horse Powertrain, the equipment manufacturer specializing in the supply of thermal engines, created thanks to the grouping of the activities of the two manufacturers in this field.
Aramco had signed a letter of intent in March 2023 “with a view to possibly becoming a minority shareholder” of Horse, an entity whose creation had been announced five months earlier by Luca de Meo. But the negotiations dragged on, to the point of not being successful for the official birth of the new company, a month ago.
” Killer team “
The deal is now done. “Decarbonizing the automotive industry will not be done alone,” Renault CEO Luca de Meo said in the press release, for whom Horse now has a “dream team to reinvent the future of thermal and hybrid technologies.”
The participation is, however, lower than the scenario which has long circulated on the market. The Saudi group will acquire 10% of Horse’s shares, while the figure of 20% has long seemed favored. Renault and its Chinese ally will each retain 45% of the capital.
The check made by Aramco values the new equipment manufacturer at 7.4 billion euros. This figure “seems relatively generous when compared to other OEMs, but this is not an ordinary OEM, with customers […] rather captive,” point out the analysts at Kepler Cheuvreux.
Horse will design and produce thermal and hybrid engines for the various Renault and Geely brands, while looking for other customers elsewhere. The company has therefore claimed from the first day 15 billion in annual turnover, with a strike force of 19,000 employees worldwide and 17 factories.
On an accounting level, this agreement will provide Renault with 370 million euros in cash. Despite the recovery in the manufacturer’s profitability and the hundreds of millions generated by the gradual sale of shares held in Nissan, this sum will not be too much compared to the investments that Renault must make (like all manufacturers) to negotiate the shift in electrification and that of the software-centric vehicle.
Focus on synthetic fuels
The Saudi group must also share its technological know-how with Horse Powertrain. The press release mentions collaborations “on technologies, fuels and lubricants”, before detailing: “Aramco’s unique capabilities, including a global network of R&D centers where research on synthetic fuels, hydrogen and optimization of thermal engines is conducted, will facilitate the development of accessible and sustainable decarbonized solutions.”
With the arrival of Aramco at Horse, Luca de Meo is taking another step forward in the realization of Revolution, the ambitious strategic plan unveiled in November 2022, which is based on a multiplication of partnerships to ally in each profession with the most relevant company. It is now necessary that economic results are there, and that multi-party governance does not result in a slowdown in decisions.
