Renault CEO Proposes Auto Industry Alliance to Share EV R&D Costs

Technology Author: EqualOcean News Feb 21, 2024 03:43 PM (GMT+8)

Media reports claim that Renault's CEO Luca de Meo is currently pushing for the formation of an automotive industry alliance, similar to the Airbus model in the airline industry. He pointed out that in order to mitigate the high cost of EV production, automakers need to share R&D resources and business integration in a collaborative manner, thereby realizing economies of scale and reducing the cost of EVs.

In the current critical period of transformation of the global automotive industry, the rapid development of electric vehicles has become the strategic center of gravity for major car companies. Especially in Europe, traditional automakers are facing challenges from strict environmental regulations, intensified price competition, and emerging EV brands such as Tesla, all of which have combined to drive the need for European automakers to explore new modes of cooperation. Luca de Meo, chief executive of Renault, has proposed the establishment of an automotive industry alliance similar to the Airbus model in the aviation sector, in order to share the high cost of EV production through cooperation, sharing of research and development resources and merging of businesses, and to reduce the price of EVs through the effect of scale.

Inspired by Japan's light-vehicle cooperation model, European giants such as Volkswagen, Renault and Stellantis have begun to explore the possibility of jointly developing affordable electric vehicles to cope with overseas competition. Meanwhile, Stellantis CEO Carlos Tavares has publicly expressed interest in mergers and acquisitions, while Renault prefers simpler and less risky forms of cooperation. luca de Meo emphasized the importance of maintaining corporate flexibility rather than large-scale mergers.

In addition, European automakers face potential financial risks with the impending implementation of stricter emissions rules in the European Union. By 2025, new emissions standards will require carmakers to reduce sales of fuel vehicles and increase sales of electric vehicles, or face hefty fines. Volkswagen, for example, could face fines of up to €2 billion if it fails to significantly reduce emissions from its fleet.

Meanwhile, the European EV market is also affected by software glitches, high operational and maintenance costs, and high insurance costs. Insurance costs for EVs are typically higher than for conventional cars due to the complexity of their maintenance. Removal of incentives by governments, concerns over maintenance costs by leasing companies, and consumer dissatisfaction with climate policies have also created challenges for the European EV industry.

Against this backdrop, the strategic realignment of European automakers becomes particularly important. If they fail to adapt to fierce international competition, European carmakers could face a serious existential crisis. The stability of the European automotive industry and the maintenance of millions of jobs are of great importance to the EU economy. Therefore, finding effective coping strategies is not only related to the development of car companies themselves, but also to the future of the whole industry and even the European economy.