Analysis
9 Oct 17

'Drive the Future': Renault's master plan to outgrow Europe – and diesel

In 2005, when Carlos Ghosn became CEO of Renault, the company's profitability depended on one model – the Mégane – and one market – France. 'Drive the Future 2017/2022' is the master plan to finally transform Renault into a truly global brand, leading the charge to an electric mobility future. 

Unveiling the plan in Paris, Renault revealed for the first time how dependent it still is on Europe, which in 2016 represented 57% of its overall volume (1.8 million out of 3.2 million units sold) and 75% of its operating margin (€3.28 billion overall). 

Target countries outside of Europe
By 2023, volume should be up by 44% to about 5 million units (if you include Russia's Avtovaz, i.e. Lada). The main target markets are Russia and China (each +500,000 units), and India, Iran and Brazil. 

While volume (and profitability) should remain stable in Europe, it is projected to grow threefold in the Americas and fivefold in Eurasia and the Middle-East/Africa region. And that's not even counting China. The overall aim: by 2023, 50% of the operating margin should come from outside Europe. 

But how? 'Drive the Future' will see a product blitz of 21 new models (18 renewed, 3 all-new) to build a range comprising 8 SUVs, 8 full-electric and 12 hybrid-electric models. China will see 7 launches (3 of which will be electric); India 4 (1 electric) and Iran 4 as well. 

If all goes according to plan, 'Drive the Future' will result in a global annual revenues of €70 billion and an operating margin of more than 7% by 2023, also thanks to the economies of scale realised within its alliance with Nissan and Mitsubishi. 

That may not seem very ambitious, considering last year's profitability rated 6.4%. But the improvement will have to be achieved while reducing Renault's dependency on diesel sales, especially in Europe. For sustainable mobility is a major driver of Renault's six-year plan.

Launch of Renault Energy Services
Renault is, of course, already the market leader in EV sales in Europe. And that's a position the manufacturer wants to consolidate – notably via Renault Energy Services, a new subsidiary designed to bring the vigour and vitality of a startup to the crucial field of smart energy grids. 

Smart grids can be defined as intelligent energy distribution networks that can modulate the flow of electricity in real-time, to increase the efficiency of electricity output and usage. These grids will be pivotal to the future of electric mobility, and the Renault group aims to be a major player in this field, with particular attention to smart charging, vehicle-grid interaction and the second life of EV batteries. 

Smart charging means modulating the charging of an EV in relation to both the needs of the user/driver and the supply of electricity by the grid. For example, recharging is best done when the supply is cheapest, and best avoided during peak times, when electricity is at its most expensive. 

Vehicle-to-grid systems allow cars to send power back to the grid when this is profitable (i.e. when they have recharged during off-peak hours and are standing idle and connected to the grid during peak hours). In this manner, EVs essentially become temporary energy storage units, helping to smooth out energy delivery during peak hours. 

EV batteries remain useful even after they have stopped being efficient in cars. RES will examine ways to re-use these batteries as stationary energy storage units, for both private and commercial use. 

“Groupe Renault is now a healthy, profitable, global company looking confidently ahead”, Ghosn said when presenting 'Drive the Future'. “(This plan) is about delivering strong, sustainable growth benefiting from investments in key regions and products, leveraging Alliance resources and technologies, and increasing our cost competitiveness”. 

Image: Renault
 

Authored by: Frank Jacobs