Renault CEO Luca de Meo described the deal in a statement as creating a 'dream team'. Image Credit: Shutterstock

Oil producer Saudi Aramco will buy a 10 per cent stake in a thermal engines joint venture between French carmaker Renault and Chinese automaker Geely, the companies said on Friday, valuing the business at 7.40 billion euros ($7.93 billion).

Geely and Renault will own around 45 per cent each of the powertrain venture, called Horse Powertrain, which will supply gasoline engines, hybrid systems and gearboxes for thermal vehicles.

Reuters reported on Thursday that the state-owned company was close to buying a 10 per cent stake in the venture.

Renault CEO Luca de Meo described the deal in a statement as creating a "dream team" that would "reinvent" the future of combustion-engine and hybrid technologies.

"Aramco's stake in the thermal engine joint venture could stabilize investments in legacy automakers, providing a safety net amidst the electric shift," investor platform Finimize wrote, ahead of the official announcement.

The investment comes as the global electric-vehicle market struggles with worries around demand and rising production expenses.

The European Commission this month said it would impose extra duties of up to 38.1 per cent on imported Chinese electric cars from July.

Aramco, which this month raised around $11.2 billion through a secondary share sale, had originally signalled it would buy a 20 per cent stake in Horse Powertrain.

The company signed a letter of intent in March 2023 with a view to possibly becoming a minority shareholder in the venture.

Horse Powertrain was formally established on May 31.