Renault’s robust EV prices, lower costs help offset demand dip

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Renault SA is benefiting from robust pricing and cost discipline amid continued demand for a range of models such as the electric Megane E-Tech, even as rivals suffer from a slower electric-vehicle market.

“We are sticking to a policy of stable prices,” Chief Financial Officer Thierry Pieton said Tuesday on a media call . “We have managed to lower costs by quite a bit — our new models come at a higher margin for us and at a lower price for our customers.”

The manufacturer is betting that a string of 10 new product launches this year, including the €25,000 ($26,632) all-electric Renault 5, will help draw more customers at a time some bigger rivals like Volkswagen AG are struggling. In March, sales of fully-electric cars in Europe slumped 11% with higher interest rates, weaker economic growth and the phasing out of generous subsidies contributing to the downturn.

The shares climbed as much as 1.9% in early trading before paring gains. The stock has gained more than 40% over the past year.

Pricing is encouraging and goes to show Renault’s “ability to offset currency headwinds,” Bernstein analyst Stephen Reitman wrote in a note.

Chief Executive Officer Luca de Meo earlier this year abandoned plans for the initial public offering of Renault’s software and EV arm Ampere amid Tesla Inc.’s price cuts and increased competition from Chinese manufacturers.

“The EV market is a bit slower than what had been anticipated two years ago but it’s still growing,” Pieton said during the call. “There’s a switch to electrification, no question.”

Renault Shares Outperform Peers on New Model Demand
Megane E-Tech vehicles keeps on providing access to new types of clients and 80% of those sold are with “big batteries and more powerful motor.” Half of the Austral models sold are with the higher ‘Esprit Alpine’ trim.

“People just want the attractive car, and the one that comes with a lot of the bells and whistles,” which also helps with profitability, the CFO said.

Renault, which loosened ties with long-time Japanese partner Nissan Motor Co. last year, has been holding talks with rivals including Volkswagen about sharing the cost of developing a platform for more affordable EVs.

Renault remains open to a partnership for the platform but has no news on the talks, Pieton said.

The automaker also is pooling its combustion-engine assets with China’s Zhejiang Geely Holding Co. Closing of the powertrain joint venture is imminent, he said.

Group revenue in the first quarter rose slightly to €11.7 billion, the company said, exceeding analyst estimates of €11.4 billion. Renault confirmed its outlook for the year. The order book remains strong order book with 2.5 months of forward sales.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow