Renault-Geely Joint Venture HosPowertrain Investment
"60% Will Still Drive Engine Vehicles in 2050"
As the electric vehicle market rapidly grows, Saudi Arabia's Aramco, the world's largest oil company, has bet on internal combustion engines.
On the 9th (local time), major foreign media reported that Aramco invested 740 million euros (approximately 1.1073 trillion KRW) last month to acquire a 10% stake in Hoz Powertrain, a powertrain company jointly owned by France's Renault and China's Geely Automobile.
This reflects the view that internal combustion engine vehicles will remain valid for decades to come. Aramco, Renault, and Geely foresee that the automotive industry will eventually stop designing and developing their own internal combustion engines and instead purchase engines from other companies.
Last year, Renault and Geely separated their engine and transmission divisions and invested equally to establish Hoz Powertrain. As a specialized manufacturer of internal combustion powertrains, it produces not only conventional gasoline and diesel engines but also engines using alternative fuels and hybrid powertrains. Hoz currently operates 17 factories worldwide and produces 3.2 million units annually. It plans to expand production capacity to 5 million units in the future.
Yasser Mufti, an Aramco director who led the deal, said, "It will cost an enormous amount to completely eliminate internal combustion engines worldwide," adding, "Considering economic feasibility and other factors, internal combustion engines will exist for a very long time."
When asked if he believes internal combustion engines will exist forever, Director Mufti answered, "Yes." Aramco has previously stated that it believes more than half of vehicles will still be fueled by combustion engines in 2050.
In 2021, manufacturers such as Ford, General Motors, and Mercedes-Benz, along with major governments including the UK, announced plans to stop selling internal combustion engine vehicles by 2035-2040, signaling the end of internal combustion engines. However, recent slowdowns in electric vehicle sales and the strengthening of protectionism have reversed the trend.
Matthias Gianini, CEO of Hoz Powertrain, said, "I believe that even in 2035, 2040, and beyond 2040, we will still see a significant number of internal combustion engine vehicles," adding, "Up to 60% of the population will own some type of engine vehicle, whether pure internal combustion, full hybrid, or plug-in hybrid."
CEO Gianini revealed that Hoz is negotiating with several automakers to supply engines. He said, "We plan to launch several new types of engines. Many automakers have decided to stop engine development and investment in line with the European Union's new regulations, but we are continuing."
According to CEO Gianini, Hoz can currently produce 80% of the engine types available on the market. He explained, "If an automaker fully focused on electric vehicles suddenly realizes that some regional customers want hybrid vehicles, they can collaborate with Hoz."
Philip Ushua, an automotive analyst at Jefferies, evaluated that the transition to electric vehicles is slow and that there is time because hybrids, which some thought would disappear, still exist. He added, "Today, Europe is the only region that wants to exclude internal combustion engine vehicles. China and the United States are not heading in that direction."
In addition to investing in Hoz, Aramco has recently accelerated the construction of gas station networks worldwide. As of last year, it owned 17,200 gas stations, mostly in the United States, China, and Japan. This year, it has entered developing markets such as Chile and Pakistan.
It is also investing in the development of low-carbon synthetic fuels and acquired a U.S. lubricants company for $2.65 billion last year.
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