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Renault CEO Says Red Tape Hurting EU Automakers

Luca de Meo points to what he calls a serious imbalance in the automotive industry’s trading relationship between Europe, the U.S. and China.

European automakers are being hamstrung by regulation while they see rivals in the U.S. and China working with huge state help.

That’s the view of Renault CEO Luca de Meo. He points out that more than twice as many Chinese manufacturers turned up to the IAA Mobility 2023 in Munich than for the previous IAA show, illustrating how targeted the European automotive market has become.

However, De Meo (pictured, below left) says Renault is not afraid of facing competition.

Luca de Meo_CEO of SEAT.jpg“There is a clear movement where China is very active, ambitious when it comes to the automotive industry in general and particularly with electric cars, where they have created the infrastructure forming the base to become a very serious player,” he tells a roundtable of global media at the show

“The only thing we can do is to accept that and look at them and be humble but not play the victim. Through technology, I think we have all the confidence to compete.”

De Meo concedes that many of the Chinese products are likely to be less expensive than those from existing European manufacturers.

“However, if you remember when the Japanese and Korean manufacturers came to Europe it was exactly the same thing,” he says. “Did they take 95% of the market? Or, in fact, when you add up all the non-European manufacturers today it makes up about 25% of the market, not 95%.”

Nonetheless, he points to there being a serious imbalance in the automotive industry’s trading relationship between Europe, the U.S. and China. Alluding to current U.S. protectionist policies, he says: “Globally, we are in that kind of race into a form of asymmetrical competition. Because you have the Americans playing the protectionist game with the IRA (Inflation Reduction Act), while on the other side, we are facing a Chinese ecosystem that is supported heavily by the government’s clear industrial policy including manufacturing subsidies and providing money for investment.”

De Meo explains that while regulators in the European Union will happily fund innovative R&D, the EU will not assist an automaker in putting that innovation into production.

“The logic only addresses one part of the story, so when you want to sell cars, you have to plan the construction yourself because the European Community is not designed to give subsidies in general across sectors,” he says.

Renault will soon publish its own report into the lack of a level playing field for European automakers in the hope of sparking a high-level debate on how to address the challenges.

 The European Commission, acting on a request from the French government, has begun investigating the import of Chinese EVs to Europe, saying they are benefiting from subsidies provided by the Chinese government and threatening the livelihood of European automakers. The so-called “anti-subsidy investigation” intends to determine whether the European Union follows through on earlier threats to impose punitive tariffs on Chinese EVs imported into the 27-country bloc.

But an even bigger challenge facing European automakers’ BEV strategies, de Meo says, is the woefully slow pace of charging infrastructure rollout. He says infrastructure will have to be accelerated at a huge pace if both the automotive industry’s and various governments’ ambitions for BEV adoption are to be realized.

“This is something, as automakers, we cannot do alone, so we need to federate interest from not only automakers, regulators and national governments but from the energy industry, infrastructure industry in a teamwork situation,” de Meo says. “The tendency has been that everyone looks at only their own part of it.”

Renault may have been one of the first established automakers to embrace battery-electric-vehicle technology, but it won’t be abandoning internal-combustion engines anytime soon, de Meo says.

Echoing Toyota’s longstanding agnostic approach to powertrains, the CEO says his company shares that approach to building cars despite the billions of dollars being currently invested in BEVs.

Renault’s covering-of-bases is best illustrated with its production joint venture with Chinese automaker Geely to produce ICE engines and incorporating Renault’s commercial-vehicle division. The new company will include 17 engine plants and five R&D centers on three continents with 19,000 employees.

“Most (automakers) think that they will not invest in combustion engines but that gives us a good opportunity,” de Meo says. “You can have a ‘last man standing’ situation where perhaps you have a very good business. It’s possible that combustion engines won’t be very popular in Europe in 2035 but, for sure, they will be everywhere around the planet. Even the Chinese don’t give up on the combustion engine.”

That said, De Meo sees a more moderate way forward that will embrace all the powertrain technologies at the industry’s disposal to accelerate the reduction of greenhouse gases far quicker than relying on BEV adoption alone.

“We can push combustion engines to new heights, change the fuels and even use hydrogen – there are plenty of possibilities including e-fuels. We need to be a little bit more flexible but we will not be giving up on EVs.”

 

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