Renault CEO Luca de Meo is reportedly working and betting on a low-cost hybrid gearbox technology to strengthen the company’s position in Europe’s rapidly growing hybrid car market. This strategy is helping Renault navigate the tough transition to electric vehicles (EVs) as the demand for expensive EVs struggles to gain momentum in the region. Despite the European Union's 2035 deadline to phase out combustion engine cars, the shift towards electric mobility has been slow, adding pressure to Europe’s auto industry.
The surge in Hybrid sales gives Renault an edge
Renault's emphasis on hybrid vehicles is paying off. The company reported a 55% rise in sales of hybrid models, such as the Clio and Captur, during the first eight months of the year, outperforming the European Union’s overall growth rate of 21.1%. In the first half of the year, Renault's hybrid sales surged by 60%, making it the second-largest hybrid brand in Europe, trailing only Japan's Toyota.
Renault's Hybrid Technology: The Key to Success
The secret to Renault's hybrid success lies in a low-cost, innovative transmission system called E-Tech. Building on Renault’s historic expertise in gearboxes, the E-Tech system uses a simplified ‘dog clutch’ mechanism, allowing for efficient gear shifting without complex synchronizers. This makes the hybrid transmission lighter, cheaper, and suitable across various Renault models, from small cars to the high-powered 300-horsepower Rafale coupé sedan.
Positive Market Response to Renault’s Strategy
Investors have shown confidence in Renault's strategy, with the company’s stock rising by 6.4 per cent this year, in contrast to a 12 per cent decline in the broader European auto share index. Analysts have praised Renault’s agility and ability to balance between hybrids and electric vehicles (EVs), making it more versatile than many of its competitors. Renault’s hybrid Clio, though slightly pricier than rivals like the Toyota Yaris, offers better performance, further strengthening its market appeal.
Hybrid growth buys time, but EV challenges remain
As demand for hybrids is expected to grow through the end of the decade, Renault’s strategy could help the company remain compliant with the EU’s stringent CO2 emission regulations. The E-Tech hybrid cars emit just 95 grams of CO2 per kilometre, helping Renault achieve an average of 114 grams in the first half of 2024, better than Ford and Volkswagen. However, Renault still faces challenges in ramping up its EV sales, which currently stand at around 12 per cent of its brand sales in Europe—below the nearly 20 per cent needed for future compliance.
Upcoming EV launches could shape Renault’s future
To bolster its EV lineup, Renault plans to introduce new electric models like the Renault 4 SUV and the Renault 5 at the Paris Autoshow starting October 14. These launches are critical for Renault's long-term strategy, as the company aims to regain momentum in the electric segment, where it has been overtaken by players like Tesla and Stellantis. Analysts believe that while Renault’s hybrid sales offer short-term advantages, the success of the R5 and R4 will be key to maintaining competitiveness in the rapidly evolving EV market.
ALSO READ: WhatsApp brings low-light Video Calling mode: How to activate it?
ALSO READ: Zoom unveils AI-driven innovations at Zoomtopia 2024: Transforming workplaces with AI companion 2.0
Reported by Reuters
