Renault: Collaboration With Chinese, American EV Giants Is Advantageous

Luca de Meo, Renault's CEO, refuses to throw in the towel despite European manufacturers lagging behind Chinese and American brands in the electric vehicle (EV) space. He made this comment during the launch of the new Renault 5, at the Geneva Motor Show recently.

According to the BBC, Luca recognised the need to close the gap by demonstrating the viability and appeal of small electric vehicles like the Renault 5. Said retro-inspired new EV offers buyers a choice between two battery options, providing between 299 KM and 401 KM in range, while delivering a respectable output of 150 HP.

The Renault 5 EV aims to embrace and reconnect with its heritage of developing affordable and exciting modes of transportation. However, despite the higher production costs associated with EVs, profitability is achievable over time as the industry and battery technology mature, adds Luca.

Renault's success with the new Renault 5 is critical, despite the Zoe's previous achievements. The company is now facing stiff competition from Tesla and Chinese brands, with whom Renault intends to collaborate, particularly in battery technology, to close the gap.

Furthermore, Chinese battery giants are building gigafactories in Europe, which could make such collaborations easier. Luca also emphasised the importance of competition and collaboration, saying, "While we compete on one side, cooperation is essential on the other."

Luca also states that EV batteries can cost up to 40% of a vehicle's price, so any attempt to reduce battery prices will eventually result in cheaper EVs for end users.

However on the other end of the spectrum, Automotive Cells Company (ACC) was founded to support Europe's efforts to manufacture EV batteries domestically without reliance on the Chinese counterpart. This move aims to significantly reduce EV costs, while also ensuring a steady supply.

ACC's establishment is part of a larger trend of gigafactory development in Europe, where companies such as Sweden's Northvolt and the Tata Group announced plans to expand their automotive manufacturing prowess in the region through strategic alliances.

This could however be a tall task as CATL and BYD, two of the largest global battery manufacturers, are determined to reduce battery costs by up to 50% by the end of 2024, which would potentially wipe out other competitors who have yet to achieve economies of scale to be competitive.