De Meo’s Mid-Stage Participant Renault Might Be Europe’s Automotive Future

In lots of markets European carmakers are falling behind Chinese language EV producers as they’ve little to supply to aspiring drivers within the International South proper now.

Final yr Luca de Meo took me apart on the Geneva motor present to clarify his imaginative and prescient for Europe’s automotive future. The Renault CEO assured this environmental advocate that smaller, extra inexpensive electrical vehicles, just like the Renault 5, would revive the fortunes of European carmakers. Quick ahead 16 months, and the outlook for the west’s auto industries has darkened additional whereas de Meo is ditching vehicles for luxurious items, a sector the place Europe nonetheless guidelines the roost.

What stymied the hoped-for revival? On the again of Trump’s erratic tariffs and the withdrawal of EV tax credit, electrical automotive gross sales have slumped within the US and the turmoil is hitting carmakers’ backside strains.

In each the EU and the UK the automotive trade is asking for the beforehand agreed EV targets to be reversed. The European Fee has already agreed to delay its 2025 goal by two years, with the destiny of the 2035 engine phase-out up for debate after the summer season.

Add to this the resurgence of hybrid vehicles — rising sooner than battery electrical autos in some markets — and also you could be forgiven for pondering that western carmakers are proper to pump the brakes on EVs.

However this could be an enormous mistake.

Globally, electrical automotive gross sales are on a gradual rise, rising by greater than a 3rd within the first quarter of 2025. The fashions coming available on the market boast ultra-fast charging, longer ranges and state-of-the-art software program whereas costing drivers much less and fewer.

Nowhere is that this extra outstanding than in China, the most important automotive market globally. The gross sales of all varieties of plug-in vehicles have now overtaken petrols. Each third automotive offered in China in Could was battery electrical, making this the preferred powertrain within the nation.

However China shouldn’t be an outlier. Following an anticipated dip because of the absence of EU targets final yr, EV gross sales are additionally ticking up throughout Europe, registering a 26% enhance within the first quarter of 2025. That is the results of carmakers lastly beginning to carry inexpensive fashions priced beneath €25,000 to adjust to the stricter 2025 emissions commonplace. The introduction of the Renault 5 boosted the carmaker’s gross sales by over 80% following its introduction late final yr.

Crucially, judging the well being of EV gross sales by the state of those markets misses the complete image. Western carmakers must also fear in regards to the silent currents throughout the remainder of the world.

A much less reported however extra consequential race for the automotive future is occurring within the bigger rising automotive markets of Asia Pacific, Africa and Latin America. There, low cost Chinese language electrical vehicles are quick eroding western carmakers’ market share.

EV gross sales shares in Thailand and Ethiopia are already above many European nations. EV gross sales in Brazil, which buys practically as many vehicles as Germany, surged 90% final yr, whereas they greater than doubled in Indonesia.

T&E estimates that Chinese language gamers have already taken half of the EV market in Africa and the Center East (in comparison with simply 15% within the general automotive market). After a long time as a stronghold for the likes of VW, many European auto executives complain in non-public conferences that they’re quick shedding the South African market.

As soon as dominated by Japanese and South Korean carmakers, at the least 30% of the EV market within the Asia Pacific area (exterior China) has now been captured by Chinese language manufacturers. And as soon as a stronghold for the likes of Renault and Fiat, a whopping 80% of South American EV gross sales now comes from the Chinese language.

This isn’t on account of altering political or client preferences. The lesson is that buyers will flock to electrical vehicles when good, competitively priced fashions can be found. The issue is that western carmakers have little to supply to aspiring drivers within the International South proper now. Unhelpful coverage rollbacks within the EU, UK and the US danger pushing them additional behind.

Which brings us again to the French carmaker which de Meo circled and led to file income. With hardly any US gross sales and no presence in China, Renault is more likely to stay a mid-level participant globally. Different European automotive producers might should resign themselves to the same standing in the event that they fail to carry the fashions drivers in rising markets need to purchase.

Article from T&E. By Julia Poliscanova, Senior Director, Autos & Emobility Provide ChainsBrussels (EU)