Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Wednesday, Mar 22, 2023

Renault CEO questions wisdom of electric vehicle price cuts

Renault CEO questions wisdom of electric vehicle price cuts

Renault CEO Luca de Meo on Thursday questioned the wisdom of price cuts rivals have been implementing in a bid to bolster market share for their electric vehicle fleets.

Renault CEO Luca de Meo on Thursday questioned the wisdom of price cuts rivals have been implementing in a bid to bolster market share for their electric vehicle fleets.

“We’ve seen competitors moving prices up and down, etc., etc. this is their decision. But I don’t think it’s a very healthy practice in the long term,” he told CNBC.

“As electric cars are ramping up in Europe, we need to have a healthy business, and so, in the case of Renault, the last thing I’m going to do is to compromise on the margins, you know, of electric cars.”

De Meo’s comments follow a string of aggressive price drops announced by automakers Tesla and Ford amid pressure to remain competitive in a burgeoning EV market.

Tesla threw down the gauntlet with its mid-January announcement of price reductions for U.S.-marketed models across the board and for its Model 3 and Model Y within Europe. Ford followed on Jan. 30 with price trims for its electric Mustang Mach-E crossover.

However, De Meo signaled that sales price volatility could erode consumer confidence in EV products.

“Our priority will be to defend the value for the customer,” he said. “Because those kinds of swings are kind of value destroying for the customer, think about residual value, etc.”

Renault’s long-term allies are joining the French automaker’s EV push, with Nissan earlier this month pledging to buy a stake of up to 15% in Renault’s electric unit Ampere as part of a broader overhaul of the companies’ 24-year union. Under the reshaped, previously lopsided alliance, Renault will reduce its shareholdings in Nissan from roughly 43% to 15%.

“My job is to make the Ampere case so interesting for them [Nissan and junior alliance partner Mitsubishi] that they will decide in their capital allocation meetings to put money there and not in an alternative project,” he told CNBC, adding that the investment was not a condition of the restructure.

Earlier on Thursday, Renault reported that its group operating margin doubled to 5.6% in 2022 from 2.8% a year prior, even as net income swung to a 700 million euro ($748 million) loss. It came after the company in May wrote off a 2.3 billion euro impairment linked to exiting its Russian positions.

Renault posted record cash flow of 2.1 billion euros last year, compared with its guidance of above 1.5 billion euros. Net income from continuing operations increased to 1.6 billion euros, from 549 million euros in 2021, while group revenues inched up to 46.4 billion euros in 2022, from 41.7 billion euros a year prior.

Renault shares were largely steady at 1 p.m. London time, down modestly in intraday trade at 42.96 euros.


Supply chain issues


De Meo said he sees ongoing longevity in the supply and logistical obstacles that have plagued automakers since the onset of the Covid-19 pandemic, especially linked to the yearslong global shortage of semiconductor chips.

“We think that, on the semiconductors, [it] is going to continue to be pretty much of a challenge for another couple of years, especially on the kind of semiconductors that we use in the automotive industry,” De Meo told CNBC, estimating that logistical and component hurdles led Renault to underproduce by 300,000 cars in 2022.

He forecast similar losses in 2023.

“So it’s going to stay there. But I think we are a little bit more prepared. We know how to find the parts and how to organize production to keep doing it. But we have to recognize that this is not going to be, again, a normal year,” De Meo added.

Despite this outlook and a “still challenging environment,” Renault targets a group operating margin at or above 6% in 2022, along with operational free cash flow at or above 2 billion euros.

It also put forward a dividend of 25 euro cents per share for fiscal 2022 — marking the company’s first payout proposal in four years, according to Reuters — due to be paid in May, if approved during the company’s annual general meeting in the same month.

Newsletter

Related Articles

Hong Kong News
Close
0:00
0:00
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
Goldman Sachs cuts outlook for European bank debt over Credit Suisse crisis
Paris Rioting vs Macron anti democratic law
'Sexual Fantasy' Assignment At US School Outrages Parents
The US government has charged Chinese businessman Guo Wengui with leading a $1 billion fraud scheme that cheated thousands of followers out of their money.
Credit Suisse to borrow $54 billion from Swiss central bank
The BBC problem about China
Russian Hackers Preparing New Cyber Assault Against Ukraine
"Will Fly Wherever International Law Allows": US Warns Russia After Drone Incident
If this was in Tehran, Moscow or Hong Kong
Announcing GPT-4
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
China is calling out the US, UK, and Australia on their submarine pact, claiming they are going further down a dangerous road
A brief banking situation report
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
'No relation to the American SVB': India's SVC Bank acts to calm depositors amid brand name confusion.
Good news: The U.S. government is now guaranteeing all deposits, held by, Silicon Valley Bank, and the funds are available as of today
Silicon Valley Bank exec was Lehman Brothers CFO
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
Saudi Arabia has announced a major breakthrough in diplomacy with Iran after two years of intense talks
Elon Musk Is Planning To Build A Town In Texas For His Employees
The Silicon Valley Bank’s collapse effect is spreading around the world, affecting startup companies across the globe
City officials in Berlin announced on Thursday that all swimmers at public pools will soon be allowed to swim topless
Fitness scam
Market Chaos as USDC Loses Peg to USD after $3.3 Billion Reserves Held by Silicon Valley Bank Closed.
A primitive judge in Australia sparked outrage when he told a breastfeeding woman to leave his courtroom for being “a distraction"
Barcelona is feeling the heat as they face corruption charges over payments to former vice-president of Spain's referees' committee, Jose Maria Enriquez Negreira
Banking regulators close SVB, the largest bank failure since the financial crisis
Silicon Valley Bank: Struggles Threaten Tech Startup Ecosystem"
The unelected UK Prime Minister Rishi Sunak, an immigrant himself, defends new controversial crackdown on illegal migration
Old clip of Bill Gates saying Ukraine is a big, fat, corrupt sinkhole is going viral
Man’s penis amputated by mistake after he’s wrongly diagnosed with a tumour
2 universities in Hong Kong embrace use of ChatGPT, other AI tools
In a major snub to Downing Street's Silicon Valley dreams, UK chip giant Arm has dealt a serious blow to the government's economic strategy by opting for a US listing
Missing Chinese banker was working to set up Singapore family office
Hong Kong ditches Covid mask mandate after 945 days
Xi Jinping and His Wife Meet with Cambodian King Norodom Sihamoni and Queen Mother Norodom Monineath Sihanouk
How do stolen goods end up on Amazon, eBay and Facebook Marketplace?
It's the question on everyone's lips: could a four-day workweek be the future of employment?
Is Gold the Ultimate Safe Haven Asset in Times of Uncertainty?
Spain officials quit over trains that were too wide for tunnels...
Hello. Here is our news digest from London.
Corruption and Influence Buying Uncovered in International Mainstream Media: Investigation Reveals Growing Disinformation Mercenaries
When it comes to Tesla vs Lamborghini, an empty vessel makes more noise
European MP Clare Daly condemns US attack on Nord Stream
Former U.S. President Carter will spend his remaining time at home and receive hospice care instead of medication
North Korea test-fires an intercontinental ballistic missile into the Sea of Japan west of Hokkaido
US bombed Nord Stream gas pipelines, claims investigative journalist Seymour Hersh
US Joins 15 NATO Nations in Largest Space Data Collection Initiative in History
×