French automaker Renault SA yesterday said that it would start building only electric vehicles for China’s huge passenger car market, dropping conventional internal combustion engines, as well as its joint venture with local manufacturer Dongfeng Motor Corp (東風汽車).
The strategy shift came after years of sluggish sales in China, where Renault hoped its 50-50 venture with Dongfeng, announced in 2013 and focused on a factory in Wuhan, China, would allow it to make inroads quickly.
However, the COVID-19 pandemic, which started in Wuhan, forced the factory to shutter, just as Renault was wrestling with slowing growth worldwide and a cash flow squeeze that has prompted ratings agencies to cut its credit ratings to “junk” status.
Photo: Reuters
“We are opening a new chapter in China. We will concentrate on electric vehicles and light commercial vehicles, the two main drivers for future clean mobility,” Renault China operations chairman Francois Provost said in a statement.
The automaker is to transfer its stake in Dongfeng Renault Automobile Co Ltd (東風雷諾) to Dongfeng, which is to stop marketing the Renault brand. No financial details of the transaction were disclosed.
To bolster its all-electric push, Renault said that it would “reinforce” its eGT venture, also formed with Dongfeng, as well as Renault’s Japanese alliance partner, Nissan Motor Co, to further development of its City K-ZE model, a low-cost crossover vehicle that Renault plans to launch in Europe next year.
Renault said that its other Chinese venture, Jiangxi Jiangling Group Electric Vehicle Co (江西江鈴), aimed to have four core models for the Chinese market by 2022.
About 860,000 electric vehicles were sold in China last year, making it the largest market in the world, Renault said, although it was still just a small fraction of the 25 million vehicles of all types bought.
Renault last year sold just 180,000 cars, both traditional and electric, in China, down from 217,000 the previous year and representing less than 1 percent of the overall market.
Electric vehicles are forecast to account for 25 percent of the Chinese market by the end of this decade, it said.
Renault chairman Jean-Dominique Senard earlier this month said that he hoped to get up to 5 billion euros (US$5.47 billion) in loans guaranteed by the French state to help the automaker weather the pandemic, which has seen sales nearly grind to a halt in affected markets.
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