Renault’s EV Bet

Renault last month completed a spinoff of Ampere, its new electric vehicle (EV) business, preparatory to an initial public offering (IPO) of the unit next spring. The Paris-based automaker is valuing the new EV business at some €10 billion.

For CEO Luca de Meo, making Ampere a success is of utmost importance. At last month’s announcement, he referred to Ampere as Europe’s “structural response to the challenges coming from East and West,” meaning the US and China.

Austin, Texas-based Tesla sold the most EVs in Europe throughout the first half of 2023. In China, Elon Musk’s company is second only to Shenzhen-based BYD Motors. And BYD is growing market share across Europe, as are other Chinese manufacturers including Li Auto, XPeng Motors and Nio. From January to July, Chinese EV shipments to the EU enjoyed a year-over-year increase of 112% and a 361% spike from 2021, per customs data.

New passenger car registrations from Chinese brands across Western Europe doubled during the opening seven months of this year over the same period in 2022, according to Schmidt Automotive Research. Their EV market share hovers just above 8% and growing.

“It’s a battle,” de Meo said at an auto event in Munich. Chinese EV makers “are a generation ahead of us.”

Renault is pinning its hopes on investors buying Ampere shares ahead of the planned IPO. Ampere predicts profitability by 2025 and double-digit margin growth by 2030.

At 11 manufacturing sites across France, Ampere currently employs more than 11,000 people; more than 35% are said to be engineers. What differentiates the company from its rivals, de Meo says, is its focus on affordability and software: namely a partnership with Google Android. Critics, however, scrutinizing Renault’s decision to IPO Ampere, have urged the company to instead raise capital by selling its 28% stake in Nissan Motors, and De Meo has said that while Renault doesn’t need the cash, it will explore a sell of the Nissan stake in the first quarter. Renault CFO Thierry Piéton, meanwhile. defends the decision to take Ampere public as a strategic move, calling it “an opportunity to further accelerate the development of Ampere without drawing on Renault Group resources.”