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Renault and China’s Geely will spend up to $7.7 billion to make hybrid and gas engines.

Geely announced in a statement with the Hong Kong stock exchange that the new firm will receive funding of up to €7 billion from both the French and Chinese manufacturers.

Renault stated that the investment will be finalized by the end of the year, and that the world’s largest oil producer, Saudi Aramco, was also considering making an investment in the joint venture.

Renault stated that the investment from Saudi Aramco would contribute in the expansion of the new firm and the funding of research into synthetic and hydrogen fuels, both of which are essential to decarbonizing the automotive sector, including vehicles powered by internal combustion engines.

Three unidentified individuals close to the situation were cited by Reuters in January when they stated that Saudi Aramco was in advanced discussions with Renault and Geely to take up to a 20% interest in the joint venture.

The relationship between Renault and Geely, according to Jim Saker, head of the Centre for Automotive Management at Loughborough University in the United Kingdom, is an acknowledgment by both firms that selling into the global market requires having “alternative options than simply [electric vehicles].”

‘The goal is to build more environmentally friendly internal combustion engines that will be suitable for markets outside of those dedicated to EV,’ he said.

China has achieved record EV sales

Renault’s alliance with Geely, China’s largest privately held automaker, will increase the French automaker’s foothold in the world’s largest electric vehicle market.

According to the China Passenger Car Association, sales of EVs in China skyrocketed in the second quarter of this year, reaching a record high in June, thanks to hefty price reduction by carmakers and local government incentives. Batteries, plug-in hybrids, and fuel cell vehicles were all on the market.

Over half of Tesla’s record global sales came from its Shanghai facility, where deliveries more than doubled in the second quarter, according to figures from the CPCA. Sales in the home market and overseas are counted as deliveries.

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