Renault Navigates Hybrid Market with Innovative Technology
PARIS, Oct 14 (Reuters) – Amidst the evolving landscape of the European automotive industry, Renault is finding success in the hybrid car market, leveraging its innovative low-cost gearbox technology to gain a competitive advantage. CEO Luca de Meo’s strategic focus on this accessible hybrid approach provides Renault with a crucial foothold as competitors grapple with the electric mobility challenge.
The European Union’s upcoming ban on combustion engine cars by 2035 has put significant strain on the continent’s automotive sector. While demand for expensive electric vehicles (EVs) hasn’t yet surged, Renault is demonstrating resilience with its hybrid models, which combine a thermal engine with an electric motor.
In the first eight months of 2024, Renault experienced a 55% increase in hybrid model sales, including the Clio and Captur. This surge surpasses the 21.1% growth for the European Union overall, according to data from the European industry body ACEA. In the first half of the year, the sales increase reached 60%, making Renault the second-largest brand in this segment in Europe, trailing only Toyota.
“Renault seems to be doing very, very well,” analysts at Stifel noted following Renault’s announcement on October 8, where the company confirmed that it was on track to meet its business targets. The analysts observed, “We think the company is simply more versatile and agile than its peers.”
Retaining strength in the lucrative hybrid vehicle market has allowed de Meo to lower the group’s overall emissions and increase sales in the near term. Industry experts from Dataforce and S&P Global anticipate sustained growth in hybrid demand until the end of this decade, before EVs take over. Renault, with a market cap of 11.6 billion euros ($12.68 billion), is valued at only a quarter of Volkswagen, which makes it more agile in the market. The French state owns 15% of the company, which is currently seeking a new direction. This comes after the company largely abandoned its two-decade alliance with Nissan and Mitsubishi and canceled a planned IPO for its EV arm, Ampere.
The E-Tech Advantage: A Low-Cost Gearbox
The company’s success can be attributed to a low-cost hybrid system named E-Tech. Renault engineers drew on their original experience with gearboxes over a century ago by using a simplified ‘dog clutch’. This system can connect and disconnect gears without the complexities of synchronisers in the gear box.
The E-tech system is versatile and can be applied to all of Renault’s models, requiring fewer parts than other dual engines, which results in a lighter and more affordable system. According to Philippe Houchois, an analyst at Jefferies, “Renault is particularly at ease in balancing between battery electric vehicles and hybrid transmissions compared with its competitors.”
Further growth is expected as Renault introduces new models at affordable prices, say analysts. The Renault hybrid Clio is priced only 400 euros more than the Toyota Yaris and Peugeot 208, and it’s more powerful. Furthermore, the E-tech gearbox system is applied in small cars, as well as its new 300 horsepower Rafale coupé sedan.
Addressing Stagnant EV Sales
While Renault excels in the hybrid market, the company faces the need to increase the proportion of EVs in its sales to comply with forthcoming EU regulations limiting CO2 emissions. Renault is finding ways to comply with such limits, and it is aiming for around 20% of its sales to come from EVs, said a source familiar with the matter, who declined to be named due to confidentiality issues. The company’s current EV sales are about 12% of its brand sales in Europe. This is a struggle for the automaker, especially given the fact that they were early movers in the EV market. They have since been overtaken by pure players like Tesla and larger competitors like Stellantis.
Renault is set to unveil its new electric SUV, the Renault 4, and the new Renault 5. “Selling more hybrids instead of thermal vehicles can only go in the right direction. But the key will also be the success of the launches of both the R5 and R4,” said Giraud.
