Renault’s revolution: ‘toward a ‘next gen’ automotive company’

Ahead of its initial targets, Renault Group opens the third chapter of its Renaulution plan: revolution. Renault Group aims at becoming a Next Gen automotive company built on 5 focused businesses addressing all the new value chains: electric vehicles, software, new mobility services, and circular economy, in addition to ICE and hybrid vehicles.

At the same time, Renault is turning to a lot of partners, persuaded that it can’t cope with the challenges alone anymore. Major companies that Renault Group will be working with are Geely, Google, and Qualcomm, to name the most important, among others.

“Today’s announcements are a new sign of the Renault Group team’s determination to prepare the company for the future challenges and opportunities generated by the transformation of our industry,” says group CEO Luca de Meo. “After having executed one of the fastest and most unexpected recovery plans, after having prepared the company for growth by securing the development of the best product line-up in decades, we intend to position ourselves faster and stronger than the competition on the new automotive value chains: EV, software, new mobility, and circular economy.”

And he continues: “We focus full-fledged teams on each of the automotive and mobility value chains. We design an agile and innovative organization to manage the volatility and fast technological evolution of our times. Speed, accountability, transparency, and specialization for excellence are the keywords.”

“Renault Group is one team of teams, benefiting from simplified governance and digital management platforms boosting collaboration and breaking silos typical of traditional organizations. Allocating up to 10% of the capital to our employees will contribute to fostering a new common culture oriented to value creation.”

“We believe also in cooperation when it comes to investing, creating, and scaling new businesses and technologies. This is the core of our horizontal approach, and the network of leading partners that are participating in our different projects is proof of the quality of our initiatives. All this is one of the most progressive re-engineering projects of the recent years in our industry, a Revolution of its kind.”

Five focused businesses

To become this next-generation automotive company, Renault is building five focused businesses. There is Ampere, the first EV & Software pure player born from an OEM disruption. The envisaged IPO on Euronext Paris will be at the earliest in the second half of  2023 (subject to market conditions) with Renault Group keeping a strong majority and the support of potential strategic cornerstone investors (including Qualcomm Technologies, Inc.)

Then there is Alpine, wanting to be a high-end zero-emission global brand with a racing pedigree. A unique asset-light model combined with proprietary technologies. The company is set to expand globally with half of its future growth outside of Europe leveraging commercial partnerships and investor support. Alpine is open to capitalizing on the financial valuation of its F1 Team assets.

Third is Mobilize, built around a leading financial services company to enter the market of new mobility, energy, and data-based services Of course there’s the most recent business, ‘The Future Is Neutral’, the 360° circular economy company focusing on a closed loop in materials to battery recycling.

And then, last but not least, there’s Power, the traditional core business of Renault Group. It will continue to develop innovative low emissions ICE and hybrid vehicles under the Renault, Dacia, and Renault LCV brands, each with its dedicated organization and governance. To reinforce and project this part of the business into the future, Renault announces the creation of a leading worldwide Tier 1 supplier of ICE and hybrid powertrain technologies, the Horse project.

A partnerships ecosystem

The Horse project is a 50/50% framework agreement between Renault Group and Geely holding. The new company will be an autonomous worldwide supplier of new-generation hybrid drivelines and carbon-/emission-poor technologies. There will be five worldwide R&D centers involved. They will work for different clients: Renault, Dacia, Geely Auto, Volvo Cars, Lynk &Co, Proton, Nissan, and Mitsubishi Motors.

17 plants will produce ICE and hybrid drivelines on three continents, employing 19 000 persons. They will build over 5 million transmissions and ICE and hybrid drivelines for over 130 countries. The combined product portfolio of Geely Auto and Renault Group can offer solutions for 80% of the worldwide ICE market, which will still stay very important in the coming decades, according to CEO de Meo.

Renault Group has also built deep partnerships with 2 major tech players, Google and Qualcomm Technologies, to create game-changing technologies that will enable the development of Software-Defined Vehicle (SDV) including Centralized Electronic Architecture and Car Operating Systems.

Finally, Light Commercial Vehicles (LCV) of the Renault Group is to launch, in partnership with an OEM that is not yet announced, a game-changing EV and software-defined family of vans, called FlexEVan. It allows real-time, end-to-end operations monitoring and data-driven fleet management. FlexEVan’s disruptive concept and technology will ensure a 30% saving in the total cost of usage for mobility operators.

More solid financial outlook

In stark contrast to the revenues of 2021 (some 100 million euros), Renault Group will earn about€ 1,5 billion in 2022. The aim is now to have a free cash flow of more than € 2 billion in the 2023-2025 period and above € 3 billion every year from 2026 to 2030. The targets concerning the profit margins are more than 8% in 2025 and above 10% by 2030.

Renault Group plans to restore dividend payments from 2023. This dividend policy, a first for Renault Group, will gradually grow, in a disciplined manner, up to a 35% payout ratio of the Group’s consolidated net income. To do so, the Group must achieve its first priority: return to an investment grade rating. There’s also the ambition to grow employees’ shareholding to 10% by 2030.

 

 

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