Renault Planning To Compete With Tesla In The Electric Market

Renault SA RNLSY is trying to tap into the electric market as its industry peers are rapidly expanding their electric offerings. And it may produce a new vehicle on a platform with Nissan Motor Co NSANF and in alliance with Mitsubishi Motors Corp. MBFJF. What many forget is that Nissan and Renault are in fact one of the early ones who acted on the electric trend, with Zoe and Nissan Leaf respectively. But unfortunately, these models lack major shared components. And Nissan's scandal that led to the arrest of its CEO Carlos Ghosn surely added tension in what was already a challenging relationship.

Model

The French carmaker wants to launch an EV that is bigger than its best-selling Zoe. Being all-electric, it could even compete with Tesla Inc.'s TSLA Model 3 and Volkswagen AG VWAGY's ID.3. Besides rolling out a new version of the Zoe with an extended range next year, Renault is also working on a more affordable vehicle. Its low-cost model is built for China but it could be used to build an affordable yet all-electric European version. Renault is pursuing plans to produce eight electric models in its portfolio, covering all segments with electric cars by 2022.

Nissan Arrangement

Renault owns a 43.4% stake in Nissan, while Nissan holds 15% of Renault. This arrangement wasn't altered since 1999, when Renault rescued Nissan from bankruptcy. But this relationship had its challenges which were only further escalated with Ghosn's arrest. Nissan has just named its new CEO Makoto Uchida, counting on his experience in the key market of China. Many find that Nissan's crisis goes beyond Ghosn, as its succeeding CEO resigned less than a month ago. Hiroto Saikawa, resigned after revealing a faulty stock-related payment plant that as a consequence had him and other executives overpaid. Saikawa denied any wrongdoing, assuring that he will return excess funds but this was yet another blow to Nissan that reported in July that its profits pretty much vanished with a 99% drop during the first quarter of its fiscal year.

Competitors

Toyota Motor Corporation T is greatly speeding up to adjust to the changing market. Toyota and Subaru announced last Friday that they will expand their partnership into connected-car programs and a co-developed electric vehicle platform.

In September, Ford Motor Co F said it would launch eight electric vehicles in Europe throughout the year as part of achieving that electric cars make the majority of its sales by 2022. It already has the Fusion, which comes both as a hybrid and plug-in option, and the Explorer. Due to its European segment losing money for years there is great pressure to restructure its operations and cut costs so Ford is sourcing components and underpinnings from VW when it comes to elect. This partnership is part of Ford's $11.5 billion electric vehicle investment worldwide. Last year, Ford announced that by 2022, its investment in the electric future and the needed technology will amount to $11 billion, resulting in 40 electric vehicles. Likewise, General Motors Company GM, whose workers have been on strike for nearly four weeks, is heavily betting on developing a US-made electric vehicle, with the investment amounting to $300 million. But as far as EV go, the structurally unprofitable Tesla is the market leader with its five fully electric vehicles.

Outlook

Nissan and Renault are bound to be in a tug power war. Besides the deep plunge in profits and plummeted sales, Nissan also announced 12,500 dismissals worldwide. And as the demand in the electric market just keeps getting stronger – so will competitors. Hopefully, they'll restore their relationship soon enough so they can tap into this demand that will only grow with tougher emissions standards globally. Even a giant like Toyota is aware that it cannot do it alone and is open to partnerships and new insights. And the opportunity for innovations lies in battery design.

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