Renault CEO Luca de Meo isn’t any stranger to the “rush” of low cost electric vehicles from China. However, its efforts to work with German rival Volkswagen to create a viable European-made alternative failed.
The two European automotive giants were negotiating the event of an inexpensive version of Renault’s Twingo electric automotive.
Reuters first reported last week that these talks were on the snapping point as Volkswagen left the negotiating table. De Meo, a vocal supporter of a united front by European automakers against corporations reminiscent of BYD and Geely, confirmed that the matter was closed to journalists on Wednesday.
The standstill was allegedly on account of Renault wanting to have the automotive in-built certainly one of its factories, which might contradict Volkswagen’s ambition to completely utilize its production network – a degree also cited by the carmaker’s works council.
For de Meo, who previously worked for the Volkswagen Group as president of SEAT, the collapse of the talks was an occasion for a passive-aggressive insult to his German competitors.
“I wanted to show that the European industry can work together as a team, so I think this is a missed opportunity, but there could be others,” said the Renault CEO told reporters Wednesday.
Reuters reported that Renault continues to be planning to develop the electrical Twingo, which may very well be ready as early as 2026. However, Volkswagen is in peril of ranging from scratch and in search of an electrical automotive to compete with BYD.
Representatives of Volkswagen and Renault didn’t immediately reply to Fortune’s Request for comments.
The role of the EU: From tariffs to a brand new “Marshall Plan”
It’s secure to say that the economic impact of a price competition with the Chinese electric vehicle industry is not going to be in favor of European automakers.
Chinese corporations reminiscent of BYD and Geely have a big price advantage over their Western competitors on account of government subsidies, low cost labor and, uniquely, control over your complete supply chain of an electrical vehicle, including batteries.
These benefits mean that even looming import tariffs are unlikely to be enough to scale back the quantity of Chinese electric vehicles entering the continent, in keeping with a European Commission investigation.
BYD’s Seal U automotive, which costs 42,000 euros ($45,000) in Europe, is 11 times more profitable there than in its home market, where it sells for 20,500 euros ($21,950). Based on this economic logic, Rhodium Group research concluded that only a tariff of greater than 50% can be enough to discourage large imports.
While US President Joe Biden managed to impose a one hundred pc tariff on Chinese electric automotive imports, Europe is unlikely to flex its protectionist muscles to the identical extent, given its greater dependence on the Chinese economy in other areas.
Alternatively, de Meo is looking on policymakers to extend demand incentives for cautious European motorists, whose enthusiasm for electric vehicles has waned in recent times on account of inflationary pressures.
In March, de Meo evoked World War II by calling for a “Marshall Plan” in a brief letter wherein he mentioned China by name 23 times, including an allusion to Europe facing an “onrush” of electrical vehicles from the country.
Europe should increase the supply of small, reasonably priced electric vehicles and shorten the lifespan of CO2-emitting combustion engines on the road, de Meo said.
The Renault boss’s decision after the collapse of the planned Volkswagen project suggests that he continues to be in search of other European carmakers to work with him on developing an electrical vehicle that would compete with the wave of imports.
Not everyone seems to be likely to answer this, because some automotive manufacturers take the approach: “If you can’t beat them, you have to join them.”
Stellantis, the manufacturer behind Alfa Romeo, Fiat and Peugeot, announced it’s going to begin selling Chinese electric vehicles in Europe later this yr through its partnership with Hangzhou-based Leapmotor.
Carlos Tavares, CEO of Stellantis, explained the move as follows: “Like it or not, they’re taking market share.
“What I can do is take advantage of that momentum.”
Whichever path European automotive manufacturers take, it is obvious that they need a method to cope with an enormous challenge that has only just begun.
