Exclusive-Renault CEO pushes on with electric split as Russia bill looms-sources
2022.04.07 15:40
FILE PHOTO: New version of Renault’s small battery electric Zoe model car on show at a dealership, in Reading, Britain October 23, 2020. REUTERS/Nick Carey
By Gilles Guillaume
PARIS (Reuters) – Renault (PA:RENA) chief Luca de Meo wants to press ahead with plans to create separate divisions for electric (EV) and combustion engine vehicles despite potentially costly uncertainty over its interests in Russia, three sources told Reuters.
Playing catch-up with rivals like Tesla (NASDAQ:TSLA) and Volkswagen (DE:VOWG_p), the French automaker first outlined its strategy shift in February, days before Russia’s invasion of Ukraine, saying its turnaround plan was ahead of schedule.
An internal assessment on progress will be made in three months, two of the sources said. The Renault group’s top selling EVs are the Dacia Spring and the Renault Zoe – long a market leader but becoming an ageing model.
“Despite the Russian x-factor, Luca de Meo wants to move quickly on the creation of the two entities,” one of the sources told Reuters.
Several working groups are actively working on the creation of two separate legal structures, codenamed “Ampere” for the electric and “Horse” for the thermal and hybrid assets, two of the three sources said.
Renault declined to comment.
The war in Ukraine has resulted in Western powers imposing extensive sanctions against Russia, leaving Renault, majority owner of Russia’s biggest carmaker Avtovaz, faced with what de Meo has called a “very complex situation.”
POTENTIAL COSTS
Renault in late March said it would cut its forecast for operating profit and cash flow and is considering a 2.3 billion euro ($2.4 billion) non-cash writedown to reflect the potential costs of suspending operations in Russia.
According to the three sources, Renault plans to make progress on the split between electric and conventional engines within the next three months. An internal assessment of the progress made is due in July, two of the sources said.
Talks with unions should start by the summer, the third source said.
The growing preference among investment managers for companies focused on low-carbon technology has helped Tesla become the world’s highest-valued automaker, and led some investors and analysts to urge other carmakers to consider separating their combustion and electric businesses.
One of the sources said Renault is still pursuing a previously announced plan under which a “pure electric entity” could be based in France, while a separate one for combustion engine and hybrids could be based abroad and open to partnerships.
Several media outlets reported this week that management had told analysts that all options were open regarding the envisaged split, including a stock market listing of the electrical part.
Shares in Renault, which plans a capital markets day of briefings for analysts and investors in the autumn, have lost around 30% of their value since the start of the war.
