China’s Geely Automobile Holdings and Renault SA have moved one step closer to finalising a deal to bring Saudi Arabia’s national oil producer on board as a partner in a venture to develop car engines based on gasoline, alternative fuels and hybrid technologies. Saudi Arabian Oil Company (Saudi Aramco) has signed a letter of intent to acquire a minority stake in an existing joint venture set up by Shanghai-headquartered Geely and France-based Renault , according to a filing with the Hong Kong stock exchange late on Wednesday. “Saudi Aramco’s investment would support research and development across synthetic fuels and next-generation hydrogen technologies,” Renault and Geely said in a joint announcement released on Renault’s official website. Geely and Renault will hold equal equity stakes in the as-yet-unnamed joint venture upon the deal’s completion, the companies said, providing no further details. Saudi Aramco was in discussions to take a stake of up to 20 per cent in the Geely-Renault power-train firm, according to a Reuters’ report in January, citing people familiar with the matter. “This letter of intent represents a new milestone in our ongoing commitment to transportation technologies, and presents a platform to support Aramco’s research and development in engine innovation,” said Mohammed Y. Al Qahtani, Aramco executive vice-president of downstream. If signed, the deal would make Aramco the first major oil producer to invest in the car business, at a time when rising demand for electric cars continues to threaten conventional fuels. Chinese EV maker Zeekr, owned by Geely, secures US$750 million in funding “Our planned collaboration with Geely and Renault would support the development of power trains across the automotive industry, and aligns with our broader efforts across our global operations,” Al Qahtani said. The Renault-Geely joint venture, established in November with both sides holding a 50 per cent stake at the time, aims to supply gasoline and hybrid engines to the companies’ own brands as well as to other carmakers. The target is to become a stand-alone supplier with a combined annual capacity of over 5 million internal-combustion, hybrid and plug-in-hybrid engines, according to Wednesday’s statement. The company would have a network of 17 power-train plants and five research and development centres. HKEX’s accord with Tadawul may aid Aramco’s Hong Kong listing “The proposed investment by Aramco represents recognition from global industry leaders in the [joint venture’s] future business prospects and vision for pioneering low- and carbon-free fuels such as methanol and hydrogen,” said Daniel Li, CEO of Geely Holding Group. Geely has been working to enhance its vehicles’ smart features since it teamed up with Chinese technology giant Baidu in January 2021 to set up Jidu Automotive. That joint venture released a virtual model of its first concept car in June and plans to mass produce electric cars by next year. It also launched a dedicated electric-car brand, Zeekr , in 2021.