Lead

When many believed that Renault, a second-tier multinational automaker, was about to leave China, news of Renault establishing a research and development team in Shanghai garnered significant attention. Although Renault's performance in the domestic vehicle market is not impressive, it is still striving and gradually strengthening its team in China.

Produced by|Heyan Yueche Studio

Written by|Zhang Chi

Edited by|He Zi

2089 words in total

4 minutes to read

Renault is not disappearing in China; it has recently made new moves. According to media reports, Renault has established a research and development team of dozens of people in Shanghai, primarily responsible for an electric vehicle modification project.

Notably, this team is still actively recruiting software engineers. This implies that there is a significant possibility that the team will undertake other new tasks in the future. The recruitment of software-related engineers suggests that the Shanghai team will be directly involved in software development. Simultaneously, the Shanghai R&D team will report directly to Renault headquarters, becoming essentially equal in reporting hierarchy to Renault China. This means that Renault's Shanghai R&D team will become an integral part of Renault's global R&D system in the future.

△Renault's recruitment in Shanghai continues

Renault's tumultuous journey in China

Previously, Renault's strategy in China was constrained by the Nissan-Renault alliance, giving way to Nissan during the fastest-growing phase of the domestic automotive market. By the time Renault regained its focus and began to lay out the domestic market, establishing Dongfeng Renault with Dongfeng, the domestic environment was no longer conducive to Renault's rapid development. Later, Renault also invested in Brilliance Jinbei, hoping to develop in the light commercial vehicle market, but the insolvent Brilliance could no longer support the joint venture company.

△Renault's two major joint ventures in China, Dongfeng Renault and Brilliance Renault, have faded from the stage

After successively withdrawing from Dongfeng Renault and Brilliance Renault, Renault shifted its focus in China to electric vehicles and light commercial vehicles, establishing eGT New Energy Auto and Jiangling EV with Dongfeng and Jiangling, respectively. However, eGT New Energy Auto was not spared in the fiercely competitive electric vehicle market in China. In the first half of this year, eGT New Energy Auto sold only 8,917 vehicles, a year-on-year decrease of 82.24%. eGT New Energy Auto's main model is the Dacia Spring, whose primary sales market is the European Union. However, with the EU beginning to impose tariffs on domestically manufactured electric vehicles, the Dacia Spring, which already has slim profit margins, has essentially lost its footing in the EU.

△The Dacia Spring produced by eGT New Energy Auto is primarily supplied to the European market

Renault's future positioning in China

Before the EU initiated an anti-subsidy investigation into electric vehicles made in China, the Dacia Spring was a model that could not be ignored in the EU market. Its low entry price made it well-received in the EU market, regularly ranking high on various countries' electric vehicle sales charts. It is important to note that from design to manufacturing, the Dacia Spring model is almost entirely led by the Chinese team.

△The Dacia Spring, led by the Chinese team throughout, is a popular electric vehicle in the EU

Having tasted success, Renault is unlikely to easily abandon this lucrative path. Since it is not feasible to directly export electric vehicles produced in China to Europe using an asset-light model, Renault can still leverage China's industrial chain for research and development and the construction of the entire ecosystem. To this end, Renault has successively collaborated with domestic enterprises such as Geely, CATL, Envision AESC, and WeRide in fields including complete vehicles, batteries, and intelligent driving. Notably, the autonomous microbus collaboration between Renault and WeRide was demonstrated during the 2024 French Open.

△Renault's collaborations with domestic enterprises continue unabated

According to sales data disclosed by Renault, in the first half of 2024, the Renault Group sold 1.155 million new vehicles globally. Among them, Renault sold 847,000 vehicles in the European market. If categorized by powertrain, almost half of the new vehicles sold by the Renault brand in the first half of the year were electrified models. In the European hybrid vehicle market, Renault ranks second, with multiple strategic models ranking among the top ten. In Renault's strategic transformation, Alpine, which focuses on the pure electric field, will occupy an important position. Replicating the success of the Dacia Spring, further leveraging domestic engineering development and component supply chains, and then empowering Renault models produced globally will be crucial for Renault's sustained development.

△Replicating the success of the Dacia Spring will determine Renault's future success

China's automotive supply chain remains advantageous

For multinational automakers, China leads the world in both core technology research and development areas such as new energy and intelligent connectivity, as well as in cost-competitive supply chains. The United States and the European Union use tariffs to block Chinese electric vehicles or Chinese automobiles from entering their markets, which is a shortcut to protect their domestic automotive industries. However, for automakers in the United States and the European Union, their efforts to leverage China's automotive supply chain for technological upgrades and cost reduction have never ceased.

Regardless of Renault's reorganization of its R&D team in China, China's electric vehicle supply chain has always been an important cornerstone for the production of Volkswagen's ID. series in Europe. Previously, when asked why the cost of the ID.3 produced in Germany was much higher than the same model produced domestically, a Volkswagen spokesperson pointed out that all suppliers for this model were from China. Therefore, from a certain perspective, the more successful Volkswagen is in pressing down supplier prices domestically, the more profitable it becomes in Europe and globally.

△All suppliers of Volkswagen ID.3 are from China

Tesla shares the same viewpoint. While building a new superfactory in Mexico, there were rumors that Tesla hoped some of its major component suppliers for its Shanghai superfactory would establish factories in Mexico to continue supplying Tesla. In Musk's view, the Shanghai superfactory's feat of going from piling to the rollout of the first vehicle in just 12 months was not only due to the efforts of the complete vehicle team but also inseparable from the full support of its localized supply chain.

△Tesla hopes Chinese suppliers will establish factories in Mexico

Commentary

For Renault to make a comeback in the Chinese market, considering the challenges currently faced by multinational automakers such as Volkswagen and General Motors, it is evident that the road ahead is fraught with difficulties. However, for Renault, this does not prevent it from leveraging the advantages of China's automotive supply chain to, in turn, nurture its global market. Whether from the perspective of product design or low-cost component supply chains, China's automotive supply chain is highly competitive. Therefore, if Renault or other multinational automakers can effectively utilize and integrate China's automotive component supply chain, they will be able to continuously increase their competitiveness in the global automotive market. For China's automotive supply chain, amid the high tariffs imposed by European and American countries, this undoubtedly presents a new opportunity.

(This article is originally created by Heyan Yueche and cannot be reproduced without authorization)