Key Takeaways:
- Saudi Aramco invests €740M in Horse Powertrain, betting on a long future for petrol engines.
- Saudi Aramco expects more than half of cars to still use fuel by 2050.
- Horse Powertrain aims to produce 5 million engines annually, targeting hybrid and combustion engine markets.
What Happened?
Saudi Aramco, the world’s largest oil company, is doubling down on the longevity of internal combustion engines (ICE). Despite the rise of electric vehicles (EVs), Aramco invested €740 million for a 10% stake in Horse Powertrain, a company focusing on fuel-based engines.
Horse Powertrain, backed by Chinese carmaker Geely and France’s Renault, aims to fill the gap as traditional carmakers shift their focus to EVs. “It will be incredibly expensive for the world to completely stamp out, or do without internal combustion engines,” stated Yasser Mufti, Saudi Aramco’s executive vice-president.
Why It Matters?
This move underscores Aramco’s belief that ICEs will remain relevant for decades. With the slowing growth of EV sales and rising trade protectionism, the future of ICEs seems less bleak. Aramco projects that even by 2050, more than half of all cars will still run on some sort of fuel.
This investment aligns with their strategy to continue profiting from fuel-based engines, while also exploring low-carbon and synthetic fuels. Philippe Houchois, an automotive analyst at Jefferies, notes, “The transition to EV is slower than some thought, and there are hybrids, which some thought would disappear, so the runway is longer.”
What’s Next?
Expect Horse Powertrain to ramp up production, aiming to build 5 million units annually. The company is in talks with several carmakers to supply engines, capitalizing on the demand for hybrids and fuel-based engines. Aramco is also expanding its global network of filling stations and investing in research labs to develop low-carbon and synthetic fuels.
“Our research with automotive companies and motorsports competitions has reinforced our view that synthetic fuel can be a drop-in solution in existing vehicles to reduce carbon emissions,” said Ahmad al-Khowaiter, Aramco’s technology and innovation chief. Investors should watch for how well Horse Powertrain secures contracts and adapts to evolving environmental standards.
