Renault will become electric-only brand in Europe by 2030, CEO says

PARIS -- Renault will become an electric-only brand in Europe by 2030, CEO Luca de Meo said, as the automaker moved up its timetable to halt sales of internal combustion engines.

Renault joins a growing list of brands including Stellantis brands Peugeot, Fiat and Opel, and Ford of Europe that have made similar pledges.

"Renault will be 100 percent electric in 2030 in Europe," de Meo said Thursday at a media event at Renault's technical center near Paris. In July, de Meo had put that figure at 90 percent. 

De Meo said that Renault Group would probably still sell internal combustion models through the Dacia brand after that date, or if conditions such as lack of infrastructure or high electricity prices were not conducive to an electric-only lineup. 

"We have a Plan B," he said, adding that Dacia will become electrified "at the last possible moment" in a way that respects the brand's "value for money" selling proposition.

The European Union is considering new rules that would require automakers to sell only zero emission vehicles by 2035; last year, EVs made up about 11 percent of all sales in western Europe, analyst Matthias Schmidt said on Tuesday, up from 6.8 percent in 2020. 

The next big step-down in EU CO2 emissions targets comes in 2025, followed by euro 7 rules on pollutants that are expected to add even more cost to internal-combustion engines.

"We have an obligation to participate in the transition" to a carbon-neutral Europe, de Meo said in discussing the new target for Renault to become EV-only.

Renault has just launched the Megane E-Tech Electric, only its second full-electric passenger car after the Zoe that reached the market in 2013. It will be followed by at least four other full-electric models from the brand by 2025, including the small Renault 5, a compact SUV to complement the Megane, a small crossover or SUV inspired by the classic Renault 4, and a van.

De Meo offered a "report card" on his Renaulution turnaround plan for the struggling automaker, which lost a record 7.29 billion euros ($8.35 billion) in the first half of 2020. He presented the plan in January 2021, six months after the former Seat brand CEO took the helm at Renault.

Renault eked out a small profit in the first half of 2021, with an operating margin of 2.8 percent. De Meo and CFO/Deputy CEO Clotilde Delbos will present the automaker's 2021 results on Feb. 18.

"The depth of the transformation has been impressive," de Meo said, describing it as one of the fastest in recent automotive history. Fixed costs have been cut by 2 billion euros, one year ahead of schedule, and Renault is on track to lower its breakeven point by 30 percent by 2023, he said.

Net pricing is up 6 to 7 percent, he said, acknowledging that the chip shortage – which led automakers to prioritize sales of more-profitable vehicles – and inflation have pushed up prices across the board. "Still, we did better than the market" on pricing, he said.

Renault is improving its channel mix, with more private sales, he said, and reducing diversity. De Meo pointed to the new Arkana compact coupe SUV as a model for his strategy of "value over volume": 60 percent of sales have been to private buyers, and 60 percent of sales have been hybrids, with fewer possible combinations than competitors such as the Peugeot 3008.

On the engineering side, led by Gilles Le Borgne, De Meo said the cost of the "entry ticket" for new vehicles (R&D and capex) had been cut by 40 percent; overall diversity was down by 30 percent; and development time cut by 25 percent. "Time is money," he added.

De Meo pointed to Renault's alliance with Nissan and Mitsubishi as a key driver of engineering savings. The alliance has been in disarray since the November 2018 arrest of former CEO Carlos Ghosn exposed deep rifts between the French and Japanese sides.

De Meo said he had seen his counterpart at Nissan, Makoto Uchida, only once in person since the COVID-19 pandemic started, but that Renault and Nissan executives would gather at the end of January and hold a joint press conference.

He said he hoped for a "new dynamic of collaboration" with Nissan in Europe and that with "common sense" the brands could launch new products and initiatives together.