Aramco could take stake in Renault combustion-engine unit, report says

PARIS – The Saudi oil giant Aramco could take a stake in Renault Group’s future internal-combustion engine unit, a French newspaper reported.

Reuters reported earlier this week that Renault was exploring a partnership between Geely and an unspecified oil company to take a majority stake in the unit.

The French daily Le Monde reported Thursday that Aramco would be the oil company, citing unnamed sources. Le Monde said that the French government, which holds a 12 percent stake in Renault, has been aware of talks with Aramco.

Renault said earlier this year that it was exploring ways to split off its electric-vehicle and internal combustion activities, as either partnerships with other companies or separately listed companies, to help finance the transition to electrification. 

Each unit would have about 10,000 workers, group CEO Luca de Meo has said. Details are expected to be announced at a capital markets day this autumn.

A Renault spokeswoman told Automotive News Europe that the company would not comment on the reports in Le Monde and Reuters, but that discussions with potential partners were continuing. 

Other automakers – including Ford, Geely and Mahindra -- are weighing spinoffs of their EV activities, seeking to attract the kind of capital that has driven Tesla to a trillion-dollar valuation, gain agility to develop new technologies, and manage the likely end of internal-combustion sales in the next few decades.

Aramco, which is backed by the Saudi government, is the world’s largest company by market capitalization, with an estimated value of $2.2 trillion. It would work with Renault on synthetic fuels for combustion engines, according to Le Monde. The oil company has a research center near Paris, where it concentrates on energy, transport and the environment.

The “Ampere” EV unit would be based in France, where Renault has established a production hub in the north of the country that will assemble electric cars and vans, as well as batteries. It could list on the stock market as soon as next year, and Renault would remain the majority shareholder.

The internal combustion unit – internally named “Horse” -- would be based outside of the country and will include gasoline and hybrid engine and transmissions production sites in Spain, Portugal, Turkey, Romania and Latin America.

Sources told Reuters that Renault would hold a 40 percent stake in the fossil-fuel engine unit, while Geely would also hold 40 percent and an oil company the remaining 20 percent.

Renault already has a partnership with Geely to build hybrid vehicles in South Korea, and its Alpine brand is working with Geely’s Lotus subsidiary on electric sports cars. 

Reuters contributed to this report