Paris The French carmaker Renault wants to be twice as profitable as before by the end of the decade by splitting up the electric and combustion engine business. Renault boss Luca de Meo presented the next phase of his future project for the group in Paris on Tuesday, which two years ago had to be rescued from bankruptcy by the French state with a loan worth billions.
Renault is to become a “next-generation car company,” said de Meo. To do this, the CEO smashes the previous organizational structure. In addition to the independent divisions for electric cars and combustion engines, there will be three other branches: the luxury sports car brand Alpine, financial services and recycling solutions, especially for electric car batteries.
De Meo wants to make the company, which was founded 123 years ago, fit for developments that will revolutionize the car market – such as the switch to climate-friendly drives and digitization. The focus is shifting “from selling cars to offering mobility solutions,” according to the Renault boss.
To this end, the Renault Group, to which Dacia belongs in addition to the core brand, is relying on new or intensified partnerships. The French are teaming up with Chinese carmaker Geely to spin off their combustion and hybrid vehicle business, as de Meo confirmed on Tuesday.
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The two companies want to jointly produce combustion engines and hybrid drives in the future. A joint venture will be established for this purpose, which will include 17 factories and three research and development centers with a total of 19,000 employees. It will be based in London and will be launched next year.
Renault wants to invest in the US chip giant Qualcomm in the electrical division, which is to be called “Ampere”. The company is also expanding its collaboration with Google’s parent company, Alphabet. The main concern here is the possibility of updating the car’s software online without having to visit a workshop. An option that competitors such as Volkswagen and Tesla are already offering.
According to Renault, the operating profit margin should increase to more than eight percent by 2025 and to over ten percent by 2030. A good five percent are planned for this year.
Unrestricted cash is projected to average over €2 billion per year between 2023 and 2025 and over €3 billion per year between 2026 and 2030. From next year, the carmaker wants to pay its shareholders a dividend again.
De Meo took over the management of Renault in the summer of 2020 – at the height of the company’s serious crisis. The Italian auto executive, who previously ran VW subsidiary Seat, unveiled a restructuring program dubbed “Renaulution,” which combines hard-hitting cost-cutting with a focus on a higher-priced range and electric cars.
Renault boss de Meo: “We are away from the emergency room”
“This company has gone through some challenging times over the past few years,” de Meo said on Tuesday. “Now we’re out of the ER – faster than many experts thought possible.”
>> Read also: Renault sales collapse by almost 30 percent after leaving Russia
The Renault boss emphasized that the group had so far exceeded the restructuring goals despite the “terrible market environment”. In doing so, de Meo was not only alluding to the consequences of the corona crisis, but also to the expensive withdrawal from Russia, where the group had previously sold almost a fifth of its cars.
As a result of the Russian war of aggression against Ukraine, Renault had given up its stake of almost 68 percent in the Lada manufacturer Avtovaz and parted with a plant near Moscow. The French put the amount of depreciation at more than two billion euros.
The corporate restructuring announced on Tuesday is the third and final phase of de Meo’s restructuring program. Renault had already declared in the spring that it was examining the spin-off of the classic business with combustion and hybrid vehicles and that it wanted to make electromobility the future core of the group.
renalution
1
million electric cars
per year Renault wants to build from 2030.
Around 10,000 employees are said to work for “Ampere” in France. From 2030, Renault wants to sell only electric cars in Europe and then produce one million electric vehicles per year. The division is to be listed on the stock exchange in order to obtain additional funds for investments in electromobility.
According to the company, the IPO is planned for the end of next year at the earliest. Renault wants to hold a “strong majority” in the capital of “Ampere”. The e-division “is autonomous, but not isolated,” said de Meo. “We see her as a pacesetter for the entire company.”
According to the company, the combustion engine division includes engine factories on three continents with a total of 19,000 employees. This would at least keep the French one foot in the door on the classic car market. Because outside of Europe, combustion engines or hybrid vehicles are likely to play an important role for much longer.
Cooperation with Nissan is to be reorganized
It is still unclear what role the two-decade-old alliance with the Japanese Nissan group will play in the Renault structure in the future. After years of conflict, the technologically closely interlinked car manufacturers are currently trying to reorganize.
As the savior of the former Japanese bankruptcy candidate, Renault currently holds 43 percent of Nissan, which is now the larger and stronger partner. Nevertheless, Nissan owns only 15 percent of Renault shares, which are also non-voting. Recently it was said that Renault could reduce the weight at Nissan in a kind of barter for an investment by the Japanese in the new electric car division Ampere.
Details were not announced on Tuesday. Renault CFO Thierry Piéton said only that Nissan “is currently examining the possibility of an equity investment” in Ampere.
De Meo explained that the Renault Group’s plans initially stand for themselves. With Nissan and the third partner Mitsubishi, they are working on restarting the alliance. “We are determined to give her a strong future and a new chance.”
More: Renault and Nissan are planning a new future for their fragile alliance