Wednesday, October 4, 2023

Renault boss sees electric supremacy on the way back from hell

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When Luca de Meo became CEO of Renault last summer, he took over a messy company.

But there was one essential part of the business that made the ex-Volkswagen executive smile: the electric vehicle technology he had just inherited.

Coming from a company that had spent € 1 billion to develop a popular battery-powered car system, he was surprised to find that the French company’s technology was superior.

“I drove the [Renault] car and I know the other [VW] one, and I can tell you this thing is the app that kills, ”Mr. de Meo told the Financial Times in an interview.

“Renault’s EV platform is just as good as VW’s,” he said.

It was a rare bright spot in a company plagued by chronically low morale and dire financial results, which had only worsened as Covid-19 rocked the entire auto industry.

“The context is difficult, Renault’s starting point is very low, we come from hell,” he admitted to the FT after the ructions and fallout from the arrest of former boss Carlos Ghosn.

A turnaround plan launched last week called “Renaulution” aims to cut costs by 3 billion euros and lobotomize the previous mindset of generating sales first.

The company’s “entire system” was set to increase in volume and needs to be changed, he announced last Thursday, in front of a giant screen where arty graphics highlighted new detailed ambitions which include reducing the capacity of production and generation of 6 billion euros in cash. by 2025.

Mr. de Meo is trying to force the automaker to shift, as he puts it, from “volume to value” and in so doing banish the legacy of Mr. Ghosn, the former totemic leader of Renault.

Mr Ghosn, who has led Renault and Nissan for nearly two decades, has forged bold plans to make the pair the world’s biggest automakers, aggressively increasing market share and sales.

His arrest in Japan in 2018 left the French automaker rudderless, plagued by infighting with its partner in Tokyo and interference from Paris, which controls a third of the voting rights of its shareholders.

Renault Zoe electric car is popular with consumers © Rolf Schulten / Bloomberg

Repairing the relationship with Nissan is the key to restoring peace within the alliance, which has been made more difficult by the pandemic which has cut off all business travel.

“I have to admit that with Covid we never had the chance to sit together, eat sushi together, drink sake,” said Mr de Meo, who nevertheless believes the relationship is healing.

“I’m not making it a sci-fi talk or you know, things that have nothing to do with business. I just put it on practical things. I’m talking business. I tell them things right away.

On Wednesday, Mr de Meo unveiled the renaissance of the Renault 5 as an electric model, a project that was not in the company’s official product pipeline when he joined in July. “We’ve created this together over the past six months,” he says proudly.

Renault’s electric cars, such as the Zoe, are already making as much profit as their gasoline counterparts such as the Clio, while the company hopes to make more money from its hybrid cars than its pure gasoline models within 18 months. , he told the FT.

De Meo expects 70% of its sales to be electric or hybrid by the middle of the decade, with the group selling its last internal combustion engine vehicle in Europe between 2030 and 2035.

Their margins also give hope for a recovery in Renault’s mediocre performance, but French factories difficult to close. “They must find a solution for France, where we have a sub-optimal use of our industrial footprint,” he said.

French factories are reducing their margins compared to other manufacturing operations based in the most profitable emerging markets of Morocco, Romania, Spain and Turkey.

The transformation of its Douai plant in northern France into the largest battery-powered car plant in Europe, the production of hydrogen in the country and the conversion of its Flins plant outside Paris into a recycling center will help, he said.

The only thing he ruled out was the closure of French factories. “I don’t want to be remembered as the guy who laid off 50,000 people at Renault,” he said.


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