Volkswagen could join Renault’s project to offer an electric car for less than €20,000.
Collaboration between brands is now the key to making investments in electric car projects profitable. For Renault, developing a small, affordable electric car alone is certainly not economically viable, unless it sells astronomical quantities of them. Even if the future Twingo could achieve some commercial success, it is better for the French manufacturer to protect its back by offering to share developments with other brands. Renault is therefore seeking to form a partnership.
Discussions are still ongoing, but everything seems to point to Volkswagen as the best candidate in the running for this partnership, according to Reuters and the German media Handelsblatt, December 11, 2023.
A project between Renault and Volkswagen still in its infancy
It is a little early to rejoice or criticize such an alliance between the two European groups. While Renault confirmed that several discussions were underway, the brand declined to comment with whom it was discussing, as well as the timetable attached to these discussions. However, we know from internal sources at the German manufacturer that discussions are progressing on this subject.
The final decision should be made in early 2024, so that developments of Twingo can move forward quickly enough for a release in 2026, as announced by Luca de Meo on November 15.
It has not been specified whether the other members of the Alliance, namely Nissan and Mitsubishi, are also included in the current negotiations.
What interest for Renault and Volkswagen?
By joining forces for such a project, Renault and Volkswagen could make substantial savings on developments alone. Certainly, by then, the Ampère structure (of Renault) should have achieved its cost reduction objectives for components, the creation and production phase. Sharing the financial risk of such a model with Volkswagen could relieve the French manufacturer and reassure investors.
This is also what could allow Volkswagen to find an economically viable solution to offer its ID.1, the €20,000 car that the group promises to keep up with competitors. The German group is already struggling to find the technical solutions to make its €25,000 models profitable. So, this association with Renault could remove a thorn in the side of Oliver Blume, boss of VW. The brand knows how to produce low-cost models in China, but is not able to reproduce this in Europe.
With such an association, annual production could reach up to 250,000 units. This is another way to lower costs, for a model on which margins are reduced in order to keep the price low.
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