Renault has moved ahead of the time to stop selling new cars with internal combustion engines and will transform itself into an electric brand in Europe by 2030, Chief Executive Luca de Meo said.
"By 2030, 100 percent of the cars sold by the Renault brand in Europe will be electric," De Meo said at a media event at the Renault Technical Center near Paris on January 13. In July this year, De Meo had Set this goal at 90%.
De Meo said Groupe Renault could still sell some combustion engine models through the Dacia brand after 2030, or if charging infrastructure is insufficient or electricity prices are too high. He also added, "We have a plan B." Dacia may electrify at the "last minute" to comply with the brand's "pursuit of profitability" sales strategy.
The European Union is considering new rules that would require carmakers to sell only zero-emission new cars by 2035. On Jan. 11, analyst Matthias Schmidt said EV sales would account for about 11 percent of Western Europe's total in 2021, up from 6.8 percent in 2020. "We have an obligation to actively participate" in Europe's transition to carbon neutrality, De Meo said of Renault's new goal of becoming an electric car brand.
Renault has just launched the Megane E-Tech Electric, the company's second all-electric passenger car after the Zoe (launched in 2013). The Megane is a small crossover or SUV inspired by the classic Renault 4 and a van. By 2025, the brand has at least four more pure-electric models, including the compact SUV Renault 5.
Turning losses into profits
Renault lost a record 7.29 billion euros ($8.35 billion) in the first half of 2020. After six months at the helm, De Meo presented a plan in January 2021 to get Renault out of trouble.
Renault eked out a small profit in the first half of 2021 and made an operating margin of 2.8%. De Meo and CFO and Deputy Chief Executive Clotilde Delbos will report Renault's 2021 results on February 18.
"Renault's turnaround plan has been impressive," De Meo said, describing it as one of the fastest turnarounds in automotive history in recent years. He noted that Renault had cut fixed costs by 2 billion euros, a year earlier than originally planned, and was on track to reduce its break-even point by 30 percent by 2023.
In terms of car pricing, Renault's net pricing rose 6% to 7%, De Meo said a chip shortage and inflation had pushed up car prices across the board, with the chip shortage allowing automakers to prioritise selling more lucrative models. "We've outperformed the market on pricing."
On the engineering side, De Meo said the "ticket" cost (i.e. R&D and capital expenditures) for new models has been reduced by 40%, and development time has also been reduced by 25%. He added, "Time is money."
De Meo pointed to Renault's alliances with Nissan and Mitsubishi as an element of engineering cost savings. The alliance has been in turmoil since the November 2018 arrest of former Renault CEO Carlos Ghosn. De Meo said he had met with Nissan President Makoto Uchida only once since the start of the pandemic, but executives from Renault and Nissan were due to meet at the end of January for a joint press conference. De Meo hopes to form a "new partnership" with Nissan in Europe and hopes to reach a "consensus" so that the two brands can jointly launch new products and initiatives.
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