European Regulation and Electric Vehicle Costs: Challenges for Renault's New CEO

François Provost, the new CEO of the Renault Group, has made a grand entrance with the presentation of the first semester's financial results. "My governance strategy is based on prioritisation and being cautious with factors beyond our control," he stated during a roundtable attended by ABC.

"The Renaulution plan created by Luca de Meo aimed to electrify the European range, and we have achieved it," he declared. This strategic plan is in its final phase, with the French manufacturer, the third largest in the EU market, and the executive expressed satisfaction with the achievements: "There is no need to revise our range; it is very good, and we have market share."

However, one of the future priorities is to review the costs of electric vehicles. Renault produces them under its Ampere business division, which has set a target to reduce costs by 40% to make electric vehicles affordable for buyers in the old continent.

"We have no alternative," Provost asserted. "Incentives will not be enough to lower the price to the level European customers need." The executive pointed out that one of the major challenges faced by manufacturers is the development cost burdened by bureaucracy.

In his words, two-thirds of the French group's engineers are tasked with reviewing European regulations to ensure strict compliance. "We expect that by 2030, 100 new additional automotive regulations will be created. This is simply unsustainable."

Therefore, the group's growth and profitability vector focuses on emerging markets, particularly South America and India. Here, the company has significant partnerships with the Chinese group Geely and its former Alliance partner, Nissan, respectively.

Provost brings a long international career to create these agreements and coordinate these markets. "Even so, we must be very cautious regarding competitiveness, as each market depends on it."

During the first semester, the Renault Group recorded revenues of 27.64 billion euros, a 2.5% increase from a year ago. The group's operating losses amounted to 8.404 billion euros – last year, it was an operating profit of 1.898 billion – with a margin of 6%. The net result, weighed down by Nissan, was a loss of 11.143 billion euros.

The impact of the Alliance's former partner's exit resulted in a severe blow of 11.6 billion euros, both from the loss of contributions from associated companies (2.3 billion) and accounting changes (9.3 billion). This change is made so that, from now on, any variation in the value of Nissan's stake, based on its share price, will be accounted for in equity and not in net income.