CEO Renault: Car Manufacturers Must Avoid a Price War

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Automakers must avoid a price war for electric vehicles. That said, Renault CEO Luca de Meo, in an interview with Bloomberg Television at the IAA auto show in Munich.

 

“It is important to avoid a price war in the short term,” said De Meo, who warned that European car manufacturers, in particular, will come under pressure from the price cuts of the American Tesla and Chinese car manufacturers. According to the CEO of the French car group, electric vehicles are also “not yet a mature technology”.

While the European car market is “quite weak right now,” according to De Meo, Renault’s plans to unveil a new product every month next year should help the company weather the challenging market conditions. Renault is also still planning to separate the electric vehicle segment from the petrol and diesel engine segment. That part will be brought to the stock market separately under Ampere next year. Renault hopes that this step will reduce the cost of electric vehicles over time.

The European car manufacturers will show their latest electric car models at the major German car fair this week. In doing so, they are trying to knock Tesla off the throne and fend off the increasing competition from China. The number of Chinese companies at the Munich auto show more than doubled this year compared to two years ago. Chinese manufacturers such as BYD and Xpeng are trying to conquer the European market to escape the fierce price war and weakening economy on the domestic market.

Tesla already caused a price war in China at the end of last year. Also, this year, the American carmaker has lowered the prices of its models on the world’s largest car market several times to boost sales. However, the price reductions are depressing profit margins. For example, in the second quarter, Tesla saw its profit margin fall to its lowest level in four years.

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