Pressure has risen on French companies Renault and TotalEnergies to the degree that both have taken measures to cut their Russian ties. The moves come after Ukrainian president Volodymyr Zelensky personally addressed several French companies in a video conference.
Renault has now announced that it will suspend its industrial activities in the country and that it will assess its options for its majority stake in local builder AvtoVaz. TotalEnergies halts the import of all fuels but gas. Its CEO replied that quitting would be donating money to the Russians.
The head of Ukrainian diplomacy even called on a worldwide boycott of Renault, but that won’t be necessary. Renault’s factory in Moscow, which manufactures the Duster, Captur, Arkana, and Nissan Terrano models, has been shut down amid the climbing pressure.
However, Renault is mainly exposed by its ownership of Avtovaz, which makes the Lada models and is Russia’s best-selling brand. The two factories Renault is partnering with aren’t part of the announced suspension of activities. As we reported before, this is the genuine problem for the French carmaker, which had made significant investments and stood in the wake of launching a new range of Lada models.
There’s also a relationship with Russian shareholder Rostec to be dealt with. Renault fears that dumping Avtovaz will lead to nationalization. It’s most likely passing a point of no return, losing the investment and its second-biggest market for revenue as well for good. So there’s a tough decision on the board of directors’ table in Paris.
French oil major TotalEnergies is also struggling with its Russian affairs. ‘Toothless and useless” were the words that the former CEO of Shell Ukraine used to describe the company’s stance in the face of the war.
CEO of TotalEnergies Patrick Pouyanné replied to the widespread criticism and has defended his strategy at a news show on RTL. He announced that the company would stop the import of Russian diesel and gasoline because he knew how to replace that. However, as for gas, he said the case is very different, also pointing out that he doesn’t see a way out from the 25-year contracts with the Russian providers unless the government decides the company can use ‘force majeure’.
As for now, European governments don’t sanction Russian gas. In addition, Pouyanné warned that cutting the Russian gas supply equates to partly halting the European economy.
Ukraine president Zelensky explicitly asked all the French companies active in Russia to quit their Russian assets. “(These companies) must stop being sponsors of Russia’s war machine.”
Enrich the Russians
TotalEnergies invested in the construction of three factories in the region. Pouyanné said he had no intention of withdrawing, stating: “Whether I am leaving or not, those factories will keep operations up. If I quit, I am handing over an investment of 13 billion dollars directly to the Russians. Do you want me to enrich those Russians we sanctioned?”
Looking further ahead, Pouyanné concluded: “Since Putin has invaded Ukraine, there’s no growth scenario whatsoever in Russia for TotalEnergies. So I’ve put a cross over that. Do you think I will forget what happened even when the war ends?”