Renault switches to fully electric cars for China

PARIS: French car maker Renault said Tuesday it would start building electricity only for China's huge passenger car market, dropping conventional internal combustion engines, as well as its joint venture with local manufacturer Dongfeng.

The change in strategy comes after years of slow sales in China, where Renault hoped its 50-50 adventure with Dongfeng, announced in 2013 and focused on a factory, would allow it to make rapid progress.

But the outbreak in Wuhan forced the factory to close, just as Renault was struggling with slowing growth worldwide and a cash flow constraint that has led rating agencies to downgrade their credit ratings to the junk state.

We are opening a new chapter in China. We will focus on electric vehicles and light commercial vehicles, the two main drivers of clean mobility going forward, the Renault president for operations in China said in a statement.

The automaker will transfer its stake in the DRAC company to Dongfeng, which will stop marketing the Renault brand. Financial details of the transaction were not disclosed.

To bolster its all-electric drive, Renault said it will beef up its eGT company, also formed with Dongfeng and Renault's Japanese alliance partner Nissan, to further develop its City K-ZE model, a low-cost crossover vehicle that Renault plans to launch in Europe next year.

Renault said its other Chinese company, Jiangxi Jiangling Group Electric Vehicle Co., was aiming to have four main models for the Chinese market by 2022.

He said 860,000 electric vehicles were sold in China last year, making it the world's largest market, although they were still only a small fraction of the 25 million vehicles of all kinds purchased.

Renault sold just 180,000 cars, both traditional and electric, in China in 2019, down from 217,000 the year before, and representing less than one percent of the total market.

He said electric vehicles are forecast to account for 25 percent of the Chinese market by the end of this decade.

Renault President Jean-Dominique Senard said this month that he hoped to get up to five billion euros ($ 5.5 billion) in loans guaranteed by the French state to help the automaker weather the coronavirus crisis, which has seen sales almost stop in the affected markets