Renault CEO says electric, combustion cars are 'two different sports' as automaker weighs spinoff

Electric and internal combustion cars are "two different sports," Renault Group CEO Luca de Meo said, and there is an industrial rationale for carving out the two powertrains as separate businesses.

Renault and other automakers – including Ford, Geely and Mahindra -- are weighing spinoffs of their EV activities, seeking to attract the kind of capital that has driven Tesla to a trillion-dollar valuation, gain agility to develop new technologies, and manage the likely end of internal-combustion sales in the next few decades.

Others – notably Stellantis, Volkswagen and Daimler -- have said they plan to manage the transition to electrification with the same business structure.

De Meo has said that Renault is considering a separate listing of its EV activities, while continuing to run its internal combustion production with a partner. 

"We see EV as a growth business and ICE [internal combustion engines] as a stable cash generator," de Meo said at the Financial Times Future of the Car 2022 conference on Monday.

Renault is concentrating its electric vehicle operations around a cluster of factories in northern France, including a gigafactory and an "ecosystem" of suppliers and partners. At the same time, most of its internal combustion production is based in lower-cost countries such as Romania, Morocco, Slovenia, Spain and Turkey.

"There is an industrial need to separate the two teams because they are playing different sports," he said. A separate EV unit listing could happen "when we are ready to prove to the markets and investors that it makes sense," he added.

The first EV spinoff from a major automaker, Geely's Polestar brand, is expected to go public this spring via a reverse SPAC merger.

De Meo said there is still value in the internal combustion business, and he said earlier that the majority of powertrains in 2030 will still be based on a gasoline or diesel engine, albeit with hybrid boosts.

"We think there is still potential for ICE technology, but that is an old game," he said. "In that case, synergies and size matter, and if I carve out ICE activities and combine theme with another [automaker] or another player, it will give an advantage in cost and I can cash out some of the margins and invest them in the new technology."

He added that any separation could involve 10,000 employees on each side, out of a total work force of about 160,000 at Renault. 

"It's not splitting the company in two but isolating two businesses that are completely different," he said.