Renault CEO: It’s time to ‘find a deal’ with China’s car industry

Renault Group CEO Luca de Meo says now is the time for Europe’s car industry to “find a deal” with China, after the European Commission approved substantial import tariffs on Chinese-built EVs.

De Meo, who has long been vocal in his belief that protectionist policies are an ill-conceived means of fostering competition, was speaking to journalists at the Paris motor show, shortly after tariffs of between 17.4% and 35.3% were imposed on all EVs built in China and shipped to the EU.

He has previously argued that pushing up the price of EVs from competitively priced newcomers deprives car buyers of choice and suggested that the EU should instead look to nurture its automotive industry with a cohesive industrial strategy that encourages innovation and supports vehicle production.

And now, with the tariffs imposed on a permanent basis, de Meo has said Europe could miss an opportunity to bolster the global competitiveness of its car industry, which represents 8% of Europe’s GDP and employs some 30 million people across the region. 

He acknowledged that “it’s going to be a little bit more difficult for some Chinese brands to leverage a competitive advantage in European markets” and that localising production – as BYD and Chery are doing – is one way of them “integrating differently in a deeper way into the ecosystem”.

But there will be just as significant an impact on European manufacturers, de Meo cautioned, because restricting competition also stifles innovation and reduces the ability of European manufacturers to learn from their rivals.

“Rather than talking about import duties,” he said, “why don’t we talk about the competitiveness of Europe? Do we have control of the value chain? How do we co-ordinate regulations and fines and deadlines?”

He called for a “good discussion on the industrial policy strategy for automotive” to determine “what is missing, what we should do differently and what we can copy from other areas of the world – maybe even from China – that have been pretty successful”.

He suggested that working with the Chinese car industry – rather than restricting its ability to compete internationally – could be a “stimulus” for Europe’s car manufacturers, “because we have to reinvent ourselves”.

“We have to invest in new powertrains – not only electric – and we need to invest in software, because our capability in Europe is not enough,” he said. 

Renault is already leaning on China’s EV expertise in the development of its new Twingo supermini, which is being engineered in consultation with a Chinese engineering firm with a view to optimising its profitability and accelerating its speed to market. 

De Meo continued: “I have always said we need to find a deal with China, because we won’t be able to compete and accelerate on EVs without the support of the Chinese companies that control the mining industry.

“They need a share of the market, and in exchange for that, we probably need some help.”

He suggested that automotive suppliers could be one notable beneficiary of Chinese assistance, because “they don’t have the resources to reinvest and reinvent themselves” for the EV era.

“Maybe the Chinese can help, by doing joint ventures and financing things. Instead of doing that in China, they do it here so they can take a part of the market.”

He added: “Most of the [battery] gigafactories in Europe are actually built and designed by Chinese companies, because they have experience, they know how to do it.” 

Allowing Chinese firms to compete in Europe doesn’t have to mean the downfall of its legacy car brands, de Meo emphasised: “Last year, Renault had the best result in its entire 125-year history, so it doesn’t mean that the Chinese are going to wipe us out immediately.

“It’s not going to be a walk in the park – that’s right. We’re going to react, we’re going to compete. So don’t take us as losers that will surrender in a minute.”

Referring to the US’s new 100% import tariff on Chinese-built EVs, de Meo said: “You don’t want to close yourself into a kind of Gallic village like America is doing, because then you don’t feel the heat of competition.

“You end up doing pick-up trucks that you only sell there. We need to face competition.”