Renault to Create Separate EV Unit in Major Overhaul

Renault SA is a French multinational automobile manufacturer that is headquartered in Boulogne-Billancourt, France. The company produces a wide range of vehicles, including cars, vans, trucks, and buses. Renault also has a significant presence in the electric vehicle market, with its subsidiary, Renault-Nissan-Mitsubishi, being the world's largest producer of electric vehicles.

Volkswagen said it would split itself into several divisions, putting its core business making conventionally powered cars into a joint venture with a Chinese partner. The company also detailed plans for a separate stock-market listing of its electric-vehicle division.

Renault is undergoing a radical restructuring that will leave the company mostly focused on electric vehicles. Executives hope that the overhaul will attract investment and give Renault the resources it needs to transition away from the internal combustion engine. This is a daunting task that the entire auto industry is facing, but Renault is hopeful that its new strategy will give it the edge it needs to succeed.

Renault has announced that it is partnering with Geely Automobile Holdings Ltd. to form a joint venture. The plan, which was detailed on Tuesday, will see the two companies working together to produce vehicles for the Chinese market. This is a significant move for Renault, as it will allow the company to tap into Geely’s vast resources and manufacturing capabilities.

Toyota said it was focused on gasoline-powered engines and hybrid technology, and that it was in talks with longtime alliance partner Nissan Motor Co.

The Japanese company is investing in its new EV and software business, but it didn't provide a time frame for reaching an agreement.

As the auto industry evolves, executives are restructuring operations to focus more on developing technologies for electric vehicles. This transition requires significant investment, but it is necessary to stay competitive in the changing marketplace.

Renault has taken a unique approach to its business, creating separate units focused on electric cars, combustion and hybrid engines, and its Alpine sports brand. Renault CEO Luca de Meo has even suggested listing Alpine as a separate entity in the future. This focus on different areas of the business allows Renault to be more agile and responsive to changes in the market.

"The auto industry is undergoing a series of profound changes," Mr. de Meo told investors on Tuesday while presenting the company's new strategy.

Renault announced that it would be partnering with Geely to create 17 powertrain plants and five research and development centers. The two companies would each hold a 50% stake in the new venture, with the possibility of welcoming new shareholders in the future. This partnership is expected to create around 19,000 new jobs.

Renault and Geely have announced plans to form a joint venture (JV) to supply both car makers. Renault said it expects to finalize the agreement with Geely next year. The new JV may later serve outside customers.

Geely's investment in Lotus continues a pattern of investing outside China. The Chinese auto maker is owned by Zhejiang Geely Holding Group, which also holds Swedish car maker Volvo Car AB. This shows that Geely is committed to expanding its reach and becoming a global player in the auto industry.

Renault sees its joint venture with Nissan as a key part of its turnaround plan, which executives have been working on for months. The JV is seen as a way to boost efficiency and cut costs, as well as to better compete with the likes of Toyota and Volkswagen.

However, it is still not clear how Renault's longtime partner Nissan will fit into the new company configuration. Renault has been in negotiations with Nissan about investing in Ampere, the new EV division, and has said that those talks are still ongoing. The framework being discussed would also see Renault reducing its current 43% stake in Nissan to 15% - a stake sale that its Japanese partner has long requested.

Renault plans to launch a new electric vehicle (EV) business in France, which is expected to employ around 10,000 people. The company intends to take the new company public during the second half of next year, subject to market conditions, and plans to retain a majority stake in the business.

Several issues have delayed a deal from being concluded between Renault and Nissan, according to a number of people involved in the negotiations.

One of the key issues is how intellectual property owned by Nissan would be transferred to Renault's new electric vehicle business. Nissan also doesn't want technology it developed with Renault to be shared with Geely, according to The Wall Street Journal.

When asked about the ongoing discussions over patents, Mr. de Meo said that talks would continue in the coming weeks. He went on to say that, in his opinion, it is simply a business discussion and that if needed, patents can be paid for.

He also added that Renault would be moving ahead with its restructuring, irrespective of what Nissan decides. "It's important for us even in a marriage to have our own hobbies and our own life," Mr. de Meo said. "My job is to make sure that Renault can walk on its own legs."

Renault is also hoping to gain the support of other external investors for Ampere. This includes U.S. chip maker Qualcomm Inc., which stated in a joint statement with Renault on Tuesday that it has the intention to invest in the EV business.

Renault said that its financial performance would improve as a result of its overhaul, with its operating margin doubling in the coming years. The company is targeting an operating margin of 8% by 2025 and 10% by 2030. It also reaffirmed its guidance for this year, which includes an operating margin of 5%.

The French car maker said it planned to reinstate dividends next year, which it paused in 2020 as the pandemic shuttered plants around the world. It said it aims to reach a payout of 35% of its net income in the coming year. This would be a welcome return for shareholders who have been patiently waiting for the company to rebound from the pandemic.