Groupe Renault has detailed the third chapter of its restructuring plan, Renaulution, and will split its operations into five separate entities, one of which will deal exclusively with electric vehicles. Dacia’s thermal and hybrid engine activities will be part of a division called Power, a division in which the Chinese from Geely will also invest in the future.

5 entities

Renault Group says it intends to become a next-generation automotive company based on 5 specialized businesses. Here is how Renault defines them:

• Ampere: the first player dedicated exclusively to electrical and software from a traditional car manufacturer.

• Alpine: The exclusive global zero-emissions brand that motorsport has. A unique “asset-light” business model combined with specific technological innovations.

• Mobilize : Built around a leading financial services company to deliver products to the emerging market of mobility, energy and data services.

• The future is NEUTRAL: the first company in the automotive industry dedicated to the 360° circular economy: from the closed cycle of materials to the recycling of batteries.

• Power: The Renault Group’s traditional core business will continue, developing innovative low-emission hybrid and thermal vehicles under the Renault, Dacia and Renault LCV (Light Commercial Vehicles) brands, each with its own organization and management. To strengthen and secure the future of this part of the business, the creation of a world-class manufacturer in the field of thermal and hybrid engine technologies (Horse project) has been announced.

Cooperation with Geely

Renault Group and Geely will combine their technological, industrial and research assets to create a leading supplier of powertrain technologies. Renault Group will own 50% of this company, whose global turnover will be 15 billion euros since its creation.

Thermal and hybrid vehicles will continue to account for up to 50% of global passenger car sales even in 2040. The development of efficient technologies in this field is important for the future of any global car manufacturer. For this reason, Groupe Renault aims to develop this core business by launching a completely new range of Dacia models, Renault ICE & Hybrid (passenger cars), LCVs, as well as creating a world-leading supplier in the field of thermal and hybrid vehicles. engine technology, say those from Renault.

Renault Group and Geely will merge their activities in the field of thermal engines into a company in which the partners will have equal shares (50-50).

This dedicated entity will design, develop, manufacture and market state-of-the-art thermal and hybrid engine components and systems. Since its establishment, this enterprise will have a turnover of more than 15 billion euros with a production volume of 5 million units per year. Renault has 8 customers that will benefit from increased productivity and synergies.

This separate organization will have a global reach and activities with:

– 17 plants that will serve 130 markets.

– 5 research centers in Europe (Spain, Romania and Sweden), China and South America with a total of 3000 engineers.

– A total of 19,000 employees on 3 continents.

“This organization will offer a complete technology offering for all components: engine, transmission, hybrid systems (xHEV) and batteries at the best level. With this project, Renault Group will double its size and market coverage from 40% to 80% worldwide. This growth is driven by geographic expansion with access to North America and China,” the company says.

ampere

Ampere: listing on the Euronext Paris stock exchange is expected no earlier than the second half of 2023 (depending on market conditions). Renault Group will retain a controlling stake and will receive the support of potential strategic investors (including Qualcomm Technologies, Inc.).

Project Horse

From a financial perspective, the Horse project is aimed at increasing productivity, reducing fixed costs and significantly improving the Group’s balance sheet. Renault Group will retain 50% of the capital of this organization, therefore, from the second half of 2023, it will remove this activity from the Group’s sphere of activity and from its financial statements.

The impact of this deconsolidation is estimated as follows:

Reduction of fixed assets by 2.5 billion euros.

A variation in fixed costs of €1.2 billion on average per year and a reduction of €2.4 billion in research and development and capital expenditure from 2023 to 2030.

Cost of competitiveness of power plants: 2.5 billion euros in the period 2023-2030. Positive impact already in 2024.

Dividends corresponding to the share of capital retained by the Renault Group.

Potential future capital gains.

Financial prospects 2025-2030

⦁ Operating margin: over 8% in 2025 and over 10% in 2030.

⦁ Free cash flow: more than 2 billion euros per year on average in the period 2023-2025 and more than 3 billion euros per year on average in the period 2026-2030.