Renault has launched a reflection on the separation of its activity linked to electrification. In sight, the creation of a “electric vehicles and software entity in France“, on the model of what other manufacturers such as Ford or Harley-Davidson have been able to do.
In accordance with its strategic plan called “Renaulution”, Renault confirms the launch “strategic reflections around its 100% electric and thermal activities and technologies in order to strengthen their efficiency and operational performance“. An initiative that follows rumors heard last April.
Concretely, it would be a question of creating a new entity, or spin off in English, specializing in the development, production and distribution of electric vehicles and software. The part dedicated to the electric vehicle “could bring together more than 10,000 employees by 2023“. Renault adds that said entity “autonomous“would be endowed”a business model adapted to the specificities of electricity and would aim to establish partnerships in new technologies or services“.
Beyond considerations relating to market valuation (see below), this strategy will strengthen the group’s electricity business. As a reminder, the diamond brand has set itself the goal of being 100% electric by 2030, i.e. 5 years before the 2035 deadline voted by the European Commission, which will mark the ban on sales of thermal vehicles throughout the country. ‘Europe. Hence the idea of regrouping the electrical activity in France, which should not displease the French State, a 15% shareholder.
Finally, the constructor “is also studying the opportunity to bring together its activities and its thermal and hybrid engine and transmission technologies based outside France within a specific entity“. These include thermal and hybrid powertrains developed in the plants located in Spain (Motores and Seville), Portugal (Cacia), Turkey (Bursa), Romania (Pitesti), Brazil (Curitiba), Chile (CorMecanica) and Argentina This also concerns engineering and R&D (Spain, Romania, Turkey and Brazil).
For Renault, however, it is out of the question to abandon the thermal activity, which presents “prospects and significant long-term sales opportunities in Europe and international markets“, particularly with regard to hybrid and plug-in hybrid vehicles.
These two entities are intended to remain within the Renault-Nissan-Mitsubishi alliance. The progress of these studies, which involve “consultations with employee representative bodies […] carried out with all the functions concerned at group level and in the countries involved“, will be presented in the fall of 2022.
Split or no split?
Should thermal and electrical activities be separated within the automotive sector? This is THE question of the moment, which agitates the actors of the sector. In November 2021, polled by Yahoo! Finance, Nicholas Colas, co-founder of DataTrek, an American company specializing in stock market information, and a former automotive analyst, said that automakers such as Ford and GM “were to to perform a split with their electric vehicle units.
To support his point, the latter relied on the stock market valuations obtained by companies specializing in electric vehicles such as Tesla (1000 billion dollars), Rivian (148 billion) or Lucid (88 billion). Opposite, Ford reached 79 billion dollars, against 91 billion dollars for GM. And to add:If I were a Ford or GM banker right now, I would be pushing for them to spin off their electric vehicle businesses. The valuation gaps are telling enough to get at least one meeting with the CFO“.
The same goes for Adam Jonas, automotive analyst at Morgan Stanley, who believes that automakers “undervalue electric vehicle components“. He adds that “separating EV activities from companies would allow these units to more easily access capital and attract partners“To date, only Ford (Ford Model e) and Harley-Davidson (LiveWire) have taken the plunge.