When Luca de Meo became chief executive at Renault last summer he took over a business that was in a mess.
But there was one critical part of the company that brought a smile to the ex-Volkswagen executive’s face: the electric vehicle technology he had just inherited.
Coming from a business that had spent €1bn developing a much-heralded battery car system, he was surprised to find the French company’s technology was superior.
“I drove the [Renault] car and I know the other [VW] one, and I can tell you that this thing, it’s the killer application,” Mr de Meo told the Financial Times in an interview.
Renault’s EV platform “has nothing to envy” in VW’s, he said.
It was a rare bright spot in a company beset by chronically low morale and dire financial results, which had only worsened as Covid-19 rocked the entire car industry.
“The context is difficult, the starting point of Renault is very low, we are coming from hell,” he admitted to the FT after the ructions and fallout from the arrest of former boss Carlos Ghosn.
A turnround plan launched last week called “Renaulution” aims to cut €3bn of costs and lobotomise the previous mindset of generating sales above all else.
Mr de Meo is trying to force the carmaker to shift from, as he puts it, “volume to value” and, in doing so, banish the legacy of Mr Ghosn, Renault’s totemic former leader.
The “entire system” of the company needed to be changed, he announced last Thursday, standing in front of a giant screen where arty graphics flashed the detailed new ambitions that include cutting production capacity and generating €6bn of cash by 2025.
Mr Ghosn, who ran Renault and Nissan for close to two decades, forged bold plans to make the pair the world’s largest carmakers, growing market share and sales aggressively.
His arrest in Japan in 2018 left the French carmaker rudderless, beset by infighting with its Tokyo partner and meddling from the French government, which controls a third of its shareholder voting rights.
Repairing the relationship with Nissan is key to restoring peace within the alliance, something that has been made more difficult by the pandemic halting all business travel.
“I have to admit with the Covid thing we never had the chance to sit together, eat sushi together, drink sake,” said Mr de Meo. But he believes the relationship is healing.
“I don’t make it a science fiction discussion or [talk about] things that have nothing to do with the business. I just put it on practical things. I speak business. I tell them the things straight away.”
Last Wednesday Mr de Meo unveiled the revival of the Renault 5 as an electric model, a project that was not in the company’s official product pipeline when he joined in July. “We created that together in the last six months,” he said proudly.
Renault’s electric cars, such as the Zoe, already make as much profit as their petrol equivalents such as the Clio, while the business hopes to make more money from its hybrid cars than its pure petrol models within 18 months, he told the FT.
Mr de Meo expects 70 per cent of its sales to be electric or hybrid by the middle of the decade, with the group selling its final internal combustion engine vehicle in Europe between 2030 and 2035.
Their margins also hold out hope for the revival of Renault’s poorly performing but hard-to-shut French plants. “They have to find a solution for France, where we have a lot of suboptimal utilisation of our industrial footprint,” he said.
French plants drag down margins compared with other manufacturing operations based in the more cost efficient locations of Morocco, Romania, Spain and Turkey.
Transforming its Douai plant in northern France into the largest battery car facility in Europe, producing hydrogen in the country and repurposing its Flins facility outside Paris as a recycling centre will help, he said.
The only thing he has ruled out is shutting the French factories. “I don’t want to be remembered as the guy who laid off 50,000 people at Renault.”
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