Not one step earlier, not one step later.
Text/Shanshan Xu
With little suspense, France's Renault has unveiled plans to spin off its electric vehicle business. This is not the first "spin-off" of the automotive industry, in fact, the size of the army is constantly expanding.
The reason is very simple, under the requirements of oil prices and emission reductions, the advantages of fuel vehicles have not been as good as before. When all other competitors are investing more in the electric vehicle business and accelerating the pace of electrification, Renault has no choice. More importantly, Renault has already initially tasted the benefits of abandoning the fuel vehicle business.
Giving up is never an impulsive act
Here we have to mention the former Dongfeng Renault.
Since 2019, Renault's business in the global market has declined. In 2020, Renault sold 2.95 million units worldwide, down 21.3% year-on-year, while by 2021, its global sales fell by 4.5 percentage points year-on-year to 2.696 million units.
Reflected in the results, Renault's 2020 operating income fell 21.7% to 43.5 billion euros, and a net loss of 8.05 billion euros (about $8.7 billion), the largest annual loss in its history.
It was also during this period that France Renault transferred its 50% equity in Dongfeng Renault to Dongfeng Group, and "Dongfeng Renault" officially withdrew.
Renault's business in China has been replaced by electric vehicles and light commercial vehicles. The former is mainly carried out through Renault's two joint ventures in China, EasyJet New Energy Automobile Co., Ltd. and Jiangling Group New Energy Automobile Co., Ltd., while the latter is carried out through another joint venture company, Renault Brilliance Gold Cup.
Following the withdrawal of the fuel vehicle business from the Chinese market in 2021, Renault achieved revenue of 46.2 billion euros, and despite the impact of the epidemic and the lack of core, Renault's net profit still reached 888 million euros (US$1 billion), and the performance turned into a profit.
Perhaps the time is ripe. Reuters reported that Renault CEO Luca de Meo recently said that the group is considering separating the electric vehicle business and does not rule out the possibility of listing in the future.
According to Luca de Meo, plans to spin off fuel and electric vehicles could attract investors' attention. Renault is currently funded and confident of advancing this transformation plan.
The spin-off of the electric vehicle business opens up more possibilities
All in all, developing the electric vehicle business will not be the wrong way.
Renault's previously announced "eWays ElectroPop" plan pointed out that by 2025, 10 new pure electric vehicles (including 7 Renault brand electric vehicles) will be launched, and the sales of electric vehicle models will account for more than 65%; and by 2030, the proportion of electric vehicle sales in Renault's entire product line will reach 90%. By spinning off the electric vehicle business, restructuring may help Renault accelerate this goal.
Coincidentally, Centennial Ford announced the decision to spin off the electric vehicle division in early March this year. For Renault, things that are still in the internal discussion stage, Ford has gone from start to finish.
Ford's Electric Vehicle and Fuel Vehicle Divisions are named "Ford Model e" and "Ford Blue" respectively, plus the Commercial Vehicles and Related Service Solutions Division "Ford Pro", ford's three major businesses. It is reported that the three departments will operate independently in 2023 and bear their own profits and losses.
In addition to Renault under consideration and Ford, which has completed "0 to 1", GM has also been speculated that it may split the two divisions. There is a view that the traditional auto giants are expected to compete with Tesla after divesting the electric vehicle business and making it operate independently, while also obtaining a higher valuation.
Catching up with Tesla is written into the highest goal of almost all car companies.
Last year, Japan's Toyota surpassed GM for the first time with more than 2 million units sold, dominating the U.S. auto market, followed by Ford in second place. But in stark contrast, the two companies are far behind Tesla in the secondary market. Based on the april 13 closing stock price, the total valuation of Toyota and Ford is less than one-third of Tesla's.
Perhaps from the perspective of investors, let the electric vehicle business develop independently, these traditional car companies will have the probability of winning Tesla. This is similar to the development strategy adopted by domestic car companies - constantly differentiating new energy sub-brands.
Perhaps next, more car companies will join the "spin-off army". "Not one step earlier, not one step later. At that time, everyone asked softly: Oh, are you here too? ”