The state-owned oil giant, which earned $500bn in revenue last year primarily from crude oil, recently invested €740mn for a 10% stake in Horse Powertrain, a company focused on developing fuel-based engines.
Saudi Aramco, along with other Horse shareholders, Chinese automaker Geely and French company Renault, believes that as the automotive industry shifts away from designing and developing its own combustion engines, it will increasingly rely on third-party suppliers.
"It will be incredibly expensive for the world to completely stamp out or do without internal combustion engines," said Yasser Mufti, executive vice-president at Saudi Aramco. "Considering affordability and other factors, I do think they will be around for a very, very long time."
Mufti confirmed his belief in the longevity of ICEs, stating that even in 2050, more than half of all cars will still run on some form of fuel.
In 2021, the future of ICEs appeared grim as automakers like Ford, General Motors, and Mercedes-Benz, along with governments such as the UK, pledged to end sales of new petrol and diesel engines between 2035 and 2040. However, with the slowing growth in electric vehicle sales and rising trade protectionism, the outlook for ICEs is improving.
"We believe that as far out as 2035, 2040 and even beyond 2040 we still see a significant number of ICE vehicles," said Matias Giannini, CEO of Horse. "More than half for sure, and up to 60 per cent of the population will still have some sort of an engine, whether it is pure ICE, a full hybrid or a plug-in hybrid."
This presents an opportunity to consolidate production. Giannini mentioned that Horse had already secured several business deals and was in discussions with multiple carmakers to supply engines.
"We have a variety of new engines coming out to address legislation," he said, noting that while many car companies stopped investing in engine development in response to new EU standards, Horse continued its efforts.
The joint venture, formed a year ago by merging Geely and Renault's engine and transmission divisions, created a €7.4bn company with 19,000 employees and 17 factories worldwide. Capable of producing 3.2mn units annually, Horse aims to increase this to 5mn, positioning it alongside major players like Stellantis, the owner of Chrysler, Fiat, and Citroën.
Source: FT
