The French automaker Renault has announced a significant reorganization that will break its operations into five divisions, strengthen relationships with China’s Geely, and spin off its electric vehicle branch through a stock market offering next year.
Renault said it aimed for operating margins of 8% for 2025 and a rise to more than 10% in 2030, from the 5% predicted this year, at a long-awaited investor presentation on Tuesday.
In addition, it intends to start paying dividends again in 2023 after a three-year hiatus and earn more than 2 billion euros in cash each year between 2023 and 25. The amount will then increase to more than 3 billion euros over the next five years.
Despite being a pioneer in the electric vehicle industry Renault has lagged behind more recent, nimbler competitors like Tesla. The group is seeking to extend a turnaround following losses in 2019 and 2020 and raise the valuation of its various segments after needing emergency state finance during the COVID outbreak.
However, there are still a lot of unanswered questions regarding its tense relationship with longtime Japanese partner Nissan as Renault searches for more outside investors for each of its divisions.
The key tenet of the automaker’s strategy is to separate its combustion engine business from its electric vehicle segment, which will be listed in the second half of next year and will collaborate with Geely in a 50-50 joint venture, as was also revealed on Tuesday.
Along with other investors, Nissan is anticipated to invest in the EV project, code-named “Ampere,” although Renault will maintain controlling ownership.
According to individuals who spoke to reporters, discussions with Nissan have dragged on due to Japanese reluctance to share technology with outsiders, notably a Chinese rival like Geely.
After falling more than 4% earlier, Renault’s stock plummeted more than 2% by 12:54 GMT as it provided scant information on the progress of talks with Nissan over the future of their alliance.
According to Renault CEO Luca De Meo, the group wished to offer the alliance a “fresh chance” and a bright future. As in a marriage, he added, “it is vital for us to have our own hobbies and our own interests.”
According to persons familiar with the talks, the firms had originally set a Nov. 15 deadline for announcing a deal, but no announcement is currently anticipated on that day.
Renault will have three more companies in addition to the Ampere EV unit and the combustion engine division: the Alpine sports-car brand, financial services, and new mobility and recycling initiatives.
De Meo told investors, “We are building autonomous firms, focused on structurally more lucrative activities, open to external investments, each of which is based around a native set of technology.
He compared the “old” Renault to a pentathlon competitor who would find it difficult to win gold medals in all five athletic disciplines using a sports metaphor.
He added that by teaming up with the top partners in each of its new five companies, “Renault aspires to win medals in those diverse sports instead of remaining at an average level in all five.”
