Renault/VW deal on small, affordable EV is on the ropes

According to insider information, VW and Renault have abandoned their talks about a possible cooperation for small electric cars. Around a month ago, there were already indications that the negotiations to jointly develop EVs at target prices of less than 20,000 euros were stagnating.

Rumors persisted for months that the Franco-German cooperation on small cars could work out: Renault had already made it clear shortly after the announcement of the Twingo Electric that it was looking for a partner.

According to news agency Reuters, the deal that has been pushed forward in recent months has fallen through. In the end, it was not possible to find a joint solution; the news agency quoted an insider. According to a second source, the negotiations were already very advanced. However, VW ultimately withdrew and wanted to develop the vehicle independently.

According to media reports in April, the project had already been “negotiated through.” VW was to use an architecture from the French company (a cheaper version of the AmpR Small was being discussed) and contribute to the electric drive itself.

The electric car was to be built by Renault, possibly in Novo Mesto, Slovenia, where the current Twingo comes off the production line. While Volkswagen was still keeping a low profile, Renault CEO Luca de Meo recently hinted that an agreement with the Wolfsburg-based company was close to being reached.

However, there had already been indications, too, that the cooperation could fail. Insiders reported that VW, in particular, was struggling with the idea of a deal, especially the Wolfsburg Works Council.

Production worries

VW Works Council chairperson Daniela Cavallo had not yet given her approval. She is said to have fundamental reservations about the alliance, probably above all about Renault’s plan to build the electric car.

This is because Volkswagen has several underutilized plants in Europe, such as the MEB factory in Zwickau. Audi is still looking for a successor project for the Brussels plant when production of the next generation of the Q8 e-tron moves to Mexico as planned.

In other words, the VW workforce is concerned about having a potentially high-volume project manufactured elsewhere in view of this situation.

Serious delay for ID.1?

So, it remains to be seen what will happen with the model potentially named ID.1. Due to the lack of a suitable platform, as the current version of the MEB is too expensive and not suitable for small cars, the ID.1 is unlikely to be ready as a solo project until 2029.

VW could consider technical cooperation with recent Chinese partner XPeng to further develop the car. Together with Renault on their platform with VW drives, the important 20,000-euro model could probably have been offered in 2027.

Luca de Meo reconfirmed as Renault Group CEO

Meanwhile, the Renault board has unanimously reconfirmed Luca de Meo for another four years (until 2028). Nevertheless, there was contestation about its remuneration; more than a fourth of the shareholders voted against a pay rise for de Meo.

Since he arrived at Renault in 2020, many things have happened at Renault and many were instigated by the new CEO. Apart from realigning the Alliance and searching for collaborations with other partners (see above), de Meo also opted for lower sales volumes but higher revenues.

According to the Renault board, maintaining the CEO’s remuneration’s attractivity compared to several other car companies and related sectors (like Michelin or Siemens) was necessary. Very recently, the same discussion has been going on concerning the salary of Stellantis boss Carlos Tavares.

Compared to the €36.5 million of the latter, the  5.5 million annually, plus some €5 million in bonuses, is still rather modest, relatively speaking.

Jean-Dominique Senard, President of the board of Renault Group, has confirmed Luca de Meo (right) as CEO of the group for the next four years /Renault

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