by Gilles Guillaume and Silvia Aloisi
PARIS (Reuters) – Renault detailed on Wednesday the ambitions of its new electrical entity Ampère, for which it is targeting a turnover of more than ten billion euros in 2025 and more than 25 billion euros in 2031 thanks to a range increased to seven vehicles, and still an IPO in spring 2024, but not at any price.
To face competition from Tesla and the Chinese, Renault intends to achieve price parity between electric and thermal vehicles before the competition, within the next two years for small cars and within four years for larger vehicles. .
To achieve this, Ampère intends to reduce costs by 40% on its electric vehicles which will form a range of seven models, and no longer six, including the future R5 which will be marketed from 25,000 euros, and a new small electric car, “Legend” , reinvention of the Twingo and offered for less than 20,000 euros.
“Ampère is our European response to competition from electric ‘pure players’, whether those who come from the West or those who come from the East,” declared Renault’s financial director, Thierry Piéton, during a press teleconference.
After hesitating between rise and fall in the first exchanges, Renault shares gained 1.98% around 9:50 a.m. (8:50 a.m. GMT).
“Ampère’s operational ambitions are optimistic in a gloomy market environment for electricity,” comments Jefferies in a note.
Asked about the IPO of the entity dedicated to electricity and software, one of the main objectives of the investor day organized this Wednesday, Thierry Piéton replied that it was always the “privileged route”.
“Otherwise we will continue to finance Ampère with the group’s resources, and that will pose no problem,” he added, indicating that there was no question of Renault “selling out” its new entity.
“If the context is bad (…) we are not crazy, we are not going to throw away part of the company for nothing outside,” declared general manager Luca de Meo. “We can wait, we can find alternative solutions, but what we want to do is the IPO, with a shooting window in spring 2024 if the conditions are there.”
AT THE HEART OF RENAULT’S TRANSFORMATION
In September, Luca de Meo targeted a valuation of between 8 and 10 billion euros for this new entity dedicated to electricity and software.
But a slowdown in demand for electric vehicles, increased Chinese competition and turbulent financial markets have complicated the project, for which several sources familiar with the matter told Reuters two weeks ago that the IPO would not take place in below a valuation of 6 or 7 billion.
UBS analysts even estimated that Ampère’s valuation could only be 3 to 4 billion euros because Renault is one of the European manufacturers most exposed to Chinese competition in Europe, while others advocate alternatives for raising funds.
Surrounded by Ampère’s new management, Luca de Meo will defend his project in Paris on Wednesday afternoon in front of an audience of financial analysts.
The creation of Ampère and its IPO constitute a first for a traditional automobile manufacturer, after the split of the historic thermal activities within a joint venture with other partners. The entity must also play a central role in the transformation of the more than century-old automobile manufacturer.
“It’s a great opportunity to reinvent a glorious brand which is 125 years old and which needs to project itself into the future,” continued Luca de Meo, adding that Ampère must play a role of scout for the rest of the group in the transformation that the sector is currently going through.
A sign of the concerns that this also generates within the manufacturer, the general secretary of the CGT, Sophie Binet, must go to Flins (Yvelines) on Wednesday to support the continuation of the industrial activity of the factory. The site, which currently produces the Zoé, will lose the new car assembly activity to become a center dedicated to the circular economy and hydrogen.
A pioneer in electric vehicles with Nissan in the 2010s, Renault has since been supplanted by new, more agile entrants specializing in electric vehicles.
Over the first nine months of the year, Renault’s electric sales in Europe fell by around 5%, after an increase of 2.5% in the first half, with the new generation range still far from being deployed.
Zoé and Twingo are at the end of their life and the Mégane, intended for the higher segment, continues to lag behind the Tesla Model Y, even on its national market. The next generation will be embodied by the Scenic and the new R5, which arrive in 2024, then by the R4, planned for 2025.
With this range located “at the heart of the European market”, Ampère plans to sell around 300,000 vehicles in 2025 and around one million in 2031.
The entity created on November 1 also confirmed its objective of a balanced operating profit and free cash flow in 2025 and an operating margin greater than 10% from 2030.
(Report by Gilles Guillaume, edited by Tangi Salaün and Kate Entringer)
©2023 Thomson Reuters, all rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. “Reuters” and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.