Renault to start building only electric vehicles for China

Renault Alpine A110 Sportscar 2017 Geneva show

Renault stated Tuesday that it would start building only electric vehicles for China’s passenger car market, moving away from conventional internal combustion engines and also its joint venture with Dongfeng. 

The strategy shift comes after years of declining sales in China, where Renault hoped its 50-50 venture with Dongfeng, declared in 2013 and focused on a factory in Wuhan, would permit it to make inroads quickly.

But after the coronavirus outbreak in Wuhan, Renault had to close the factory, just as Renault was dealing with declining growth worldwide and a cashflow squeeze that has urged ratings agencies to cut its credit ratings to “junk” status.

“We are starting a new chapter in China. We will focus on electric vehicles and light commercial vehicles, the two main drivers for future clean mobility,” said Francois Provost, the Renault chairman for China operations.

The automaker will move its stake in the DRAC venture to Dongfeng, which will stop marketing the Renault brand. No financial information of the transaction were revealed.

To bolster its all-electric push, Renault stated it will “reinforce” its eGT venture, also founded with Dongfeng as well as Renault’s Japanese alliance partner Nissan, to work on its development of its City K-ZE model, a low-cost crossover vehicle that Renault prepares to introduce in Europe next year.

Renault stated its other Chinese venture, Jiangxi Jiangling Group Electric Vehicle, intended to have four core models for the Chinese market by 2022.

It said 860,000 electric vehicles were sold in China in 2019, making it the largest market in the world — though they were still just a small fraction of the 25 million vehicles of all types purchased. 

Renault sold only 180,000 cars, both traditional and electric, in China in 2019, dropping from 217,000 the previous year, and accounting for less than one percent of the entire market.

It stated electric vehicles are forecast to represent 25 percent of the Chinese market by the end of this decade.

Renault chairman Jean-Dominique Senard stated this month that he hoped to get up to five billion euros ($5.5 billion) in loans guaranteed by the French state to assist the automaker weather the coronavirus crisis, which has experienced sales nearly grind to a halt in affected markets.

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