Renault begins splitting business into new divisions

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‘Renaulution’ unveiled in 2021 involves splitting the French maker’s ICE and EV divisions.

The Renault Group took major steps to reorganise its business as part of the Renaulution plan unveiled in January 2021.

First, Renault formed a joint venture with Chinese OEM Geely to make and distribute internal combustion engines (ICEs) and hybrid technology to brands owned by each OEM as well as outside customers. Pending final agreement, each OEM will hold 50% of the new venture, employing 19,000 people at 17 powertrain and three R&D facilities at launch in 2023. The new entity, based in London, will be able to supply five million engines and hybrid systems to all brands, including Renault partners Mitsubishi and Nissan in Japan.

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Renault’s carve-out of “Horse”, the ICE component of the Renaulution plan, leaves the automaker to focus on “Ampere”, Renault’s electric vehicle division, which is expected to make Renault compliant with the 2035 ICE sales ban in Europe. Complicating the deal are Nissan’s concerns with sharing intellectual property with Geely, even after the JV is launched.

Next, Renault CEO Luca de Meo presented a plan to increase profitability by splitting Renault into five separate operating companies, each led by its own CEO with profit and loss responsibilities. The component divisions are: the JV with Geely (Horse); the electric vehicle division, which will be listed in the second half of 2023 (Ampere); sports cars; recycling and mobility; and financing.

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The last three divisions will be open to investment by firms such as Qualcomm, Google and other partner companies. The plan is reminiscent of the Asian business practice of cross-investment and analysts have complained about its complexity and potential for failure should one division not be properly capitalised. Nissan has yet to comment on the new plan.

Conrad Layson

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