Horse, the Renault–Geely–Saudi-Aramco joint venture, thrives as combustion engines and hybrids stay in demand

Electric vehicle sales set a fresh global record in September - more than two million units - yet the pace of growth is nowhere near fast enough to make an immediate break from the internal combustion engine. The rising fortunes of Horse - a joint venture between Renault, Geely and Saudi-Aramco set up to design and manufacture combustion engines and hybrid systems - underline that reality.

When Horse launched in 2022, it looked destined for a minor role in a world seemingly ready to move swiftly away from petrol and diesel.

That expectation has since shifted. Electric car growth has been far slower than anticipated - particularly in Europe and North America - and global demand for combustion engines has picked up again, creating an opening that Horse is exploiting.

Growth against the tide

With 17 engine and transmission plants across Europe, China and Latin America, the company expects to lift turnover by 80% by 2029, reaching €15 billion a year.

Why Horse is winning work on hybrids and combustion engines

The logic is straightforward: faced with the cost of electrification and uneven demand for electric models, many carmakers would rather outsource the development and production of hybrid and combustion powertrains.

Renault, for instance, expects to save €2 billion in research and development by 2030 by handing the development of combustion engines to its joint venture. Geely, meanwhile, is positioned to strengthen its global standing by pairing Chinese industrial scale with European know-how.

Horse already supplies engines and transmissions to more than 15 brands, building more than eight million units a year. It is the world’s third-largest maker of combustion engines. It is also tracking roughly 100 projects spanning its full product range and all its markets - extending beyond cars to include boats, construction equipment and drones.

“Horse exists to help brands that can’t do everything at the same time,” chief executive Matias Giannini told Reuters.

Is combustion living on borrowed time?

Not everyone is persuaded by Horse’s momentum. Some analysts argue that any growth in internal combustion engine production is merely a pause before an irreversible decline.

“Investing now in combustion engines is like Kodak backing analogue film in the digital era,” said Ginny Buckley, chief executive of Electrifying.com. Others caution that once the switch to electric vehicles reaches a tipping point, the change could be swift - and brutal for businesses that rely too heavily on combustion power.

What Horse expects for 2040

For the moment, Horse appears to be operating where margins are strongest. The company’s chief executive believes that 50% of new cars sold in 2040 will be electric. There are more optimistic forecasts, but even allowing for those, tens of millions of combustion engines will still be needed for hybrid vehicles.

As Pierre Loret, an analyst at S&P Global, put it: “The internal combustion engine isn’t dead - it’s simply reinventing itself.”