Saudi Aramco will buy a 10% 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% each of the powertrain venture, called Horse Powertrain, which will supply gasoline engines, hybrid systems and gearboxes for thermal vehicles.

Reuters earlier in the day reported that the oil giant was close to buying a 10% stake in the venture.

"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 earlier in the month said it would impose extra duties of up to 38.1% on imported Chinese electric cars from July.

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

The state-owned company had 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.

($1 = 0.9334 euros)

(Reporting by Rishav Chatterjee in Bengaluru; Editing by Tasim Zahid and Sriraj Kalluvila)