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Renault SA is reportedly considering the possibility of a major restructuring followed by an IPO for its electric vehicle assets. While the company hinted in February that it was possible to split into separate EV and ICE brands, it wasn’t taken too seriously. Numerous car manufacturers had proposed a similar division at the time.
But Ford Motor Co. announced it would indeed go ahead with the plan in March, and Renault seems similarly warm to the idea, based on a meeting held between upper management and analysts last week. These included CEO Luca de Meo and CFO Thierry Pieton, both of whom reportedly acknowledged the real possibility of the French automaker’s demerger and subsequent IPO.
“The management team continues to explore the possibility of splitting the company into two entities,” Stifel analysts, including Pierre Quemener, wrote in a note shared by Bloomberg.
One such company is said to be electric vehicle-focused New Mobility, which uses assets of Renault’s Mobilize Share car-rental service that will be segregated from its legacy assets.
“The manager [Luca de Meo] added that the latter could be combined with those of a potential partner,” the note continued. “An IPO of New Mobility assets could be considered for 2023.”
Mobilize, previously proposed by Renault Group, could serve as the basis for a new vehicle division dedicated to “shared mobility and the mobility of the future”. The summary revolves around the premise that small EVs leverage “shared ownership experiences” that would reduce downtime. While Renault presented this as a way to minimize CO2 emissions and help meet Europe’s goal of carbon neutrality by 2040, it quickly got into the weeds when it started making claims about how it could also help to increase residual value somehow to maximize. Publications also mention concepts such as circular economy and ownership abandonment in favor of driving the good-as-a-service trend – something that any consumer advocate should probably vehemently oppose.
The company even unveiled the EZ-1 prototype microcar to push the premise, comparing it to the Twizy four-wheeler as if that were about to whet everyone’s apatite for a envisioned future where you’ll never have one of your own vehicle would own. The EV-1 is effectively a permanent rental, requiring customers to sync with their smartphones. The vehicle is constantly connected to the internet, allowing Renault to charge based on mileage and time spent inside. It’s a concept we’ve seen dozens of times before, and it’s never been easier to swallow, especially now that some of the biggest carsharing companies have consistently exited numerous markets after a few years of explosive growth.
Renault is keeping a low profile on this new prospective plan, so it’s not clear how (or if) Mobilize will change. The language used by the analysis makes it sound like Mobilize Share is being demolished to make way for an entirely new EV division. But the automaker’s decision to stick with mobility monikers makes me wonder if it’ll just be another attempt at bringing ridesharing to the public. The industry can’t help but talk about this stuff, presumably because manufacturers believe they’re making fortunes by turning vehicle owners into long-term renters.
<img data-attachment-id="1789294" data-permalink="https://www.thetruthaboutcars.com/2022/04/report-renault-considering-separate-ev-business-ipo-for-assets/reveal-of-the-groupe-renault-strategic-plan-on-january-14th-2021/" data-orig-file="https://www.thetruthaboutcars.com/wp-content/uploads/2022/04/Reveal-of-the-Groupe-Renault-strategic-plan-on-January-14th-2021.jpg" data-orig-size="4134,2722" data-comments-opened="1" data-image-meta="{"aperture":"0","credit":"OLIVIER MARTIN GAMBIER [email protected]","camera":"","caption":"","created_timestamp":"0","copyright":"copyright obligatoire:olivier MARTIN GAMBIER","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"1"}" data-image-title="Renault EZ-1 Prototype" data-image-description="
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Of course, this presupposes that there is a concrete plan for electric vehicles at all by this time. The French automaker has other, much bigger issues to contend with, and they may take precedence – starting with AvtoVAZ.
From Bloomberg:
The possibility of a deep Renault overhaul is looming as the company faces a crisis related to its longstanding business in Russia. Renault last month signaled a pull from its second-biggest market by suspending operations at its Moscow plant and said it is evaluating available options for its AvtoVaz venture, which makes the country’s best-selling Lada brand.
A move to split up the company would serve not only to stave off a costly exit from Russia, but also to raise funds for the development of electric vehicles and technology. Renault lowered its forecasts for the group’s operating margin and auto free cash flow, citing the suspension of its business in Russia.
Renault shares fell as much as 0.9 [percent] at the start of Tuesday’s trading, with losses rising to about 24 since Russia invaded Ukraine [percent].
But the company had discussed the possibility of restructuring ahead of formal invasions. During a Feb. 18 earnings announcement, the automaker proposed splitting up the business so it would have a division dedicated solely to electric vehicles and the launch of a range of services.
“Renault is exploring the possibility of celebrating its 100th [percent] electrical activities and technologies within a dedicated entity in France to accelerate their growth,” the statement said. “At the same time, the Renault Group is also studying the possibility of merging its activities and technologies [internal combustion] and hybrid engines and transmissions based outside of France within a separate entity.”
This appears to be very similar to Ford Motor Co’s decision to create the Model E, which aims to focus on all-electric models. While Blue Oval was somewhat reluctant to openly push the concept of shared ownership, the entity has been tasked with developing new software and technologies and services for connected vehicles. Meanwhile, other brands have been pretty open about how the transition to electric vehicles would mean changing what future vehicle ownership actually entails. As lucrative as this business model is, it’s a huge risk for any company to tangle with its legacy business — which perhaps explains the desire to separate the two.
[Images: Bondart Photography/Shutterstock; Renault]
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