Saudi Arabia’s oil and gas giant Saudi Aramco could take a stake in French automaker Renault’s (OTCPK: RNSDF) future thermal engine business after it separates it from its electric vehicle division.
According to a Reuters report on Tuesday, China’s Geely Automobile Holdings and an oil group are in talks over taking stakes in Renault’s fossil-fuel engine business.
The report notes that Japanese carmaker Nissan (OTCPK: NSANY), does not plan to take a stake in the combustion engine business.
Renault is in the process of creating a new division that will bring together all of its petrol and hybrid engine and transmission production sites in Spain, Portugal, Turkey, Romania and Latin America. The company hopes that by sharing costs for diesel and gasoline engines, it will free up funds to reinvest in electric models, a technology it pioneered with Nissan and Mitsubishi, but has fallen behind the likes of Tesla Inc. (NASDAQ: TSLA).
Renault stock has been falling after H1 2022 worldwide sales dropped to 12% Y/Y to 1,000,199 units, with the E-Tech range (electric vehicles and hybrid powertrains) accounting for 36% of passenger car sales in Europe in the 1H2022 vs. 26% in 2021.
But it’s not just Renault that’s witnessing a contraction in its fossil fuel vehicle business. EU passenger car registrations plunged 15.4% Y/Y in the month of June to the lowest level on record in terms of volume since 1996. According to the European Automobile Manufacturers’ Association (ACEA), European Union passenger car registrations fell 15.4% to 886,510 units following an 11.2% contraction in May as supply chain issues continue to limit vehicle output. New car registrations in the EU shrank by 14% to 4.6M units in 1H22.For the month, Germany posted the strongest decline of -18.1%, followed by Italy -15%, France -14.2% and Spain -7.8%.
The EV outlook is much brighter, with electric vehicles, plug-in hybrids and hybrids continuing to increase their market share, with a combined market share now of 42.5%.