Renault SA
RNLSY
recently entered into partnerships with China’s Envision AESC and France’s Verkor to supply electric car batteries for its electric vehicles (EVs) in northern France.
Headquartered in Shanghai, Envision AESC is the battery arm of the broader Envision Group, a global green tech company.
Envision AESC will invest up to 2 billion euros ($2.4 billion) for developing a gigafactory in Douai, northern France. This facility would have an initial capacity of 9 gigawatt (GWh) hours by the year 2024, and targets reaching 24 GWh by 2030. Moreover, the plant is projected to create 2,500 new employment opportunities by the end of this decade.
Renaults’ latest partnership with Envision will ensure that the Douai battery facility provides cost-effective, low-carbon and safe batteries to power an affordable range of the French automaker’s EVs.
Along with this, Renault has also signed a memorandum of understanding with the French start-up — Verkor — to jointly develop and manufacture high-performance batteries as well as take a stake of more than 20% in Verkor. Other shareholders in Verkor include Schneider Electric, Capgemini, EIT InnoEnergy and Groupe IDEC. Financial terms of Renault’s stake in the start-up are still under the wraps.
Verkor plans commencing work on a battery facility in France in 2023 with an initial capacity of 16 GWh, with 10 GWh going exclusively to Renault. The target is to produce 50 GWh by 2030, with 20 GWh going to the French automaker. The higher-performance power packs produced at this factory will be used for powering larger and premium Renault models, including the Alpine brand.
Renault’s Rising Electrification Efforts
With the heightening climate-change concerns, the face of the auto industry is rapidly transforming. Investors are now intrigued with companies that offer green solutions to their transportation needs by ensuring zero carbon emissions.
Amid this changing scenario, Renault is rapidly fortifying its capabilities to create an EV manufacturing hub in northern France in order to better capitalize on Europe’s fast-growing e-mobility sector.
The French automaker plans to combine operations at its three existing sites in Douai, Maubeuge and Ruitz into an EV hub called ElectriCity. The EV hub, capable of producing roughly 400,000 vehicles annually, is a crucial element of CEO Luca de Meo’s strategy to turn around the loss-making carmaker and bolster production of hybrids and EVs. This would also help fulfill a promise to the French state, Renault’s most dominant shareholder, of ensuring job security and advancing EV technology in the country.
The latest deals are part of Renault’s EV strategy to revert to profits. The two alliances will significantly enhance the automaker’s position in Europe and be truly beneficial in achieving its vow of Europe-based production of 1 million EVs by 2030.
Further, in sync with the commitments made by the Renault, the deals will significantly contribute to achieving carbon neutrality in Europe by 2040, with EV sales making up 90% of the total Renault brand sales by 2030.
Besides, the two partnerships, together with Renault ElectriCity, will create roughly 4,500 direct employment opportunities by 2030 in France, a country that has long suffered from industrial decline. It will also lead to the development of a solid battery manufacturing infrastructure in the heart of Europe. In fact, the proximity of the Envision AESC’s gigafactory to Renault ElectriCity production sites will create 700 additional job openings in the Hauts-de-France area.
Renault’s Zoe model was the best-selling battery-powered electric car in Europe last year but is now battling stiff competition with models made by big names like
Tesla Inc.
TSLA
and
Volkswagen AG
VWAGY
. Renault currently buys batteries for its Zoe model from South Korea’s LG Energy Solution. This Zacks Rank #5 (Strong Sell) company recorded worse-than-expected 8 billion-euro annual net loss in 2020.
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the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Amid the heated up race to EV supremacy, Renault is not the first European automaker to lay out a battery plan in recent months. In March, Volkswagen announced a multibillion-euro plan for opening six battery factories across Europe, while
Stellantis NV
STLA
will update investors on its EV strategy on Jul 8.
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