Dressed in the official polo shirt of the Alpine team, the CEO of Renault, Luca de Meo (Milan, 54 years old), presided over the space that the Formula 1 team had at the Montmeló circuit (Barcelona) on Sunday, with two guests special: the Minister of Industry, Reyes Maroto, and his successor in the presidency of Seat, his friend Wayne Griffiths. One of the motoring men in Europe, De Meo wants to use the historic Alpine brand as the brand that is first ready for electrification, with only battery-powered models from 2025.
Ask. What does Alpine bring to Renault?
Response. It gives it a more sporty dimension, no premium, but it does give a special touch to the Renault system. It has a legitimacy that everyone recognizes, because of its history. I think it was a good decision, we have the ambition to create a brand around all this, especially with electric cars, with a very emotional range. It is not easy to do it, because you have to have a platform, some components…
P. His speech is very similar to the one he defended when he launched Cupra for Seat.
R. Yes, and we also did it with Abarth at Fiat. The difference here is that Alpine is going to be a 100% electric brand and that’s another business. We are going to have a purer discourse of going for the electric.
P. In Renault’s current financial situation, can Alpine afford it?
He knows in depth all the sides of the coin.
R. It should be allowed because we have to move from volume to value, even though this is a capital-intensive industry and therefore volume has to remain important. We are going to protect volume but not at the cost of spoiling margins. All I’ve done since I’ve been at Renault is to stop doing business where Renault wasn’t making money, cut out clearly because the business was oversized, and go looking for opportunities to earn more than we’ve done in the past. If you look at Renault’s profitability, regardless of Nissan’s dividends in recent years, in the end we have never made so much money. You look at the 3.6% operating margin that we’ve done in 2021 and the quality of that result is better than what Renault has achieved in the last 16 years, despite all the problems we’ve had with semiconductors, with the reduction of volumes, the increase in the cost of raw materials, the covid… Now we are still dealing with the challenge of semiconductors, which continues to impact activity, and we have had the issue of Russia as well.
P. They have sold their factories in Russia. How will that decision impact?
R. There we had a little less than 10% of the income, but anyway, from the Russian business, and especially AutoVaz, we have never taken money out of that country, because everything was used to pay off debt. Thus, economically it is a question of Renault’s size, but in terms of the quality of the profit and loss account, we will be able to show very soon that we can recover that business.
P. Will it be possible to return to Russia?
R. In the current situation it was impossible to be. Both for us and for the rest. We have had to react very quickly, because since we could not take parts to the country or inject liquidity due to the sanctions, we were burning cash and in a few months we would have entered bankruptcy. And that means closing the beach bar and leaving 45,000 people without work. This way, if the Russian authorities take over, people will continue to have a job. That was my first goal. The second was not to continue burning cash, because I can’t afford it. And the third was to have an option to return, but under conditions of freedom to decide yes or no. What we have lost is volume and assets, but we could come back. It has happened other times that you return to the country; It is the life of large international companies, which depend a lot on geopolitical conditions. In a few weeks, if the new sanctions come in, nothing will be able to be done. At least in the automotive sector. If you are exporting oil or gas, it is something else. We have counted about 2,500 pieces that we could not enter. How were we going to make cars?
P. In the last three months, what has taken up more of your time: Moscow and the exit from Russia, or Tokyo and the negotiations with Nissan?
R. My priorities have been to operate as normally as possible and reengineer Renault to focus on future business and speed up the transition. Then the Nissan issue. Because I see opportunity; before there was a tension linked to a pressure of management of Renault that Nissan did not like. I was in Japan for 10 days, until last week. There was a very good vibe and there are good projects. There are many possibilities without making much noise. And then the issue of Russia, which I already have behind me.
P. With Nissan, do you propose a rebalancing of shareholding between Nissan and Renault?
R. The priority is to relax and take things that have nothing to do with the business out of the conversation. It is necessary to demonstrate that the projects work so that the valuation of the two companies is at a level that allows us to talk about these things later. Finally, all three companies are making money. First the stock has to go up and then we’ll talk. Things are done one after the other.
P. Is Renault ready for 2035 [límite por el que opta la UE para dejar de vender coches de combustión] when it comes to electric cars?
R. Better than others. We have everything we need. We are very well positioned for the transition to electric. That said, I am not dogmatic, and I believe that you have to work in different scenarios and you have to give yourself the opportunity to continue accompanying the transition. I think that 2035 is too soon and it should be pushed to 2040. Because, in addition, combustion engines can be reinvented through fuels. We have managed to make a more efficient engine than a diesel.
P. That is why they bet on smaller, expandable battery cell factories…
R. No. We have secured the raw materials, the assembly capacity and the partnership with LG. We do not have the money that other large groups have to advertise so many gigabytes of batteries and we have had to go step by step and focus on the issue of having battery factories next to our plants or even integrated. For what we have to sell, I think we’re going to be covered.
P. Is it possible to have a battery factory near Valladolid or Palencia?
R. In Spain what we have done, and without making much noise, is to ensure employment. Before defining the strategy in France, we have done it for Spain. Here everyone talks about gigafactories and electric cars, but zero is sold. Now I have to focus so that the north pole, ElectriCity, works. As has always happened, Spain is going to be the place where, after France, we are going to bet.
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