(Bloomberg) -- Renault SA is trying to strengthen its electric-vehicle business at a time of flagging demand by building up its footprint in a country where it doesn’t even sell cars — China.
The French automaker is turning to one of the few markets where battery-powered cars are selling well to access new technology and learn how to make EVs faster. The company has hired some 200 people in Shanghai, mainly hardware engineers working on the development of a sub-€20,000 ($21,106) electric Twingo, and also plans to onboard software engineers, according to people familiar with the situation.
“We are there to learn and we will integrate this knowledge into our own teams,” in France, Francois Provost, Renault’s chief procurement, partnerships and public affairs officer, said in an interview. He declined to elaborate on the hub’s hiring plans.
Expanding in China is a sensitive subject in France, where some unions are pushing back against management efforts to raise efficiencies via measures including limiting remote work to 2.5 days per week. Renault’s decision to develop much of its new Twingo in China has been criticized internally, and the manufacturer also employs about 3,000 product engineers in India.
Renault shares declined as much as 1.3% in Paris on Friday. The stock is still up around 7% this year.
The manufacturer confirmed its full-year guidance last month, making it an outlier in the industry. Peers including Stellantis NV, Volkswagen AG and BMW AG have issued profit warnings in recent weeks, citing slower EV demand, supplier issues and a slump in China sales. VW and Stellantis — which have been dogged by delays in the introduction of new EVs due to software problems — have since announced plans to cut jobs and close factories.
Renault is betting on its electric €25,000 R5 city car to bolster sales in the near term, and in 2025 plans to introduce models including an electric version of the 1960s-era 4L economy car and the sub-€35,000 R4. By early 2026, all of the group’s EVs — including older models — will be available with cheaper lithium iron phosphate, or LFP, batteries, Provost said.
Renault shelved plans to sell shares of its EV and software unit Ampere in an initial public offering earlier this year due to poor demand for battery-powered cars. One of Ampere’s current goals is helping Renault attract more local partners in China, Provost said.
“For example, we work very closely with our suppliers in Europe but European ones tend to focus on higher-margin, value added parts,” he said. “At times I am missing some basic parts. It’s in China that I can find these simpler, high-quality parts.”
Renault plans to deploy the lessons learned in China in its home market. Chief Executive Officer Luca de Meo is attempting to make affordable EVs in France, where labor costs are relatively high. He has retooled local factories including one in Douai in the country’s north that’s already manufacturing the new R5.
The stakes are high for Renault, which last year loosened ties with long-time alliance partner Nissan Motor Co. and whose pricier EVs such as the new Scenic haven’t been selling as well as hoped. Many consider the group too small to survive on its own in spite of being 15% owned by the French government.
“We are catching up and we are accessing technology bricks more quickly,” Provost said. “By 2026, our competitiveness — in terms of software, in terms of batteries — will be comparable to that of Chinese manufacturers building locally in Europe.”
(Updates with shares in fifth paragraph.)
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