Renault is considering the creation of an autonomous entity dedicated to its electrical activity

Renault launched a reflection on the separation of its activity linked to electrification. In sight, the creation of a “electric vehicles and software entity in France“, on the model of what other manufacturers like Ford or Harley-Davidson have managed to do.

In accordance with its strategic plan called “Renaulution”, Renault confirms the launch “strategic reflections around its 100% electrical and thermal activities and technologies to strengthen its efficiency and operational performance“. An initiative that follows the rumors heard last April.

Specifically, it would be a matter of creating a new entity, or by-product in English, specializing in the development, production and distribution of electric vehicles and software. The part dedicated to the electric vehicle “could bring together more than 10,000 employees by 2023“. Renault adds that said entity “autonomous“would be gifted”a business model adapted to the specificities of electricity and which would aim to establish partnerships in new technologies or services“.

In addition to market assessment considerations (see below), this strategy will strengthen the group’s electricity business. Remember that the Diamond brand has set itself the goal of being 100% electric by 2030, that is, 5 years before the 2035 deadline voted by the European Commission, which will mark the ban on the sale of thermal vehicles throughout the country. ‘Europe. Hence the idea of ​​regrouping the electrical activity in France, which should not displease the French State, a 15% shareholder.

Finally, the constructor “is also studying the opportunity to bring together its activities and technologies for engines and thermal and hybrid drives based outside France within a specific entity“. These include thermal and hybrid engines developed at factories located in Spain (Motores and Seville), Portugal (Cacia), Turkey (Bursa), Romania (Pitesti), Brazil (Curitiba), Chile (CorMecanica) and Argentina. engineering and R&D (Spain, Romania, Turkey and Brazil).

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For Renault, however, it is out of the question to abandon the thermal activity, which presents “significant long-term prospects and sales opportunities in Europe and international markets“, particularly with regard to hybrid and plug-in hybrid vehicles.

These two entities intend to remain within the Renault-Nissan-Mitsubishi alliance. The progress of these studies, which involve “consultations with workers’ representative bodies […] carried out with all functions involved at group level and in the countries involved“, will be presented in the fall of 2022.

Divided or not divided?

Should thermal and electrical activities be separated within the automotive sector? This is the question of the moment, which agitates the players in the sector. In November 2021, searched by Yahoo! Finance, Nicholas Colas, co-founder of DataTrek, an American company specializing in stock market information, and a former automotive analyst, said automakers like Ford and GM “went to perform a split with your electric vehicle units.

To support his argument, the latter relied on stock market valuations obtained by companies specializing in electric vehicles such as Tesla (1,000 billion dollars), Rivian (148 billion) or Lucid (88 billion). Next to it, Ford came in at $79 billion, against GM’s $91 billion. And to add:If I were a banker at Ford or GM right now, I would be pushing for them to spin off their electric vehicle businesses. Assessment gaps are enough to get at least one meeting with the CFO“.

Same story as Adam Jonas, auto analyst at Morgan Stanley, who believes automakers “undervalue electric vehicle components“. He adds that “separating EV activities from companies would allow these units to more easily access capital and attract partners“To date, only Ford (Ford Model e) and Harley-Davidson (LiveWire) have taken the plunge.

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