Confessions of an Innovation Junkie

Without doubt, Renault Group has gone through challenging times over the past few years, experiencing one of the deepest crises in its over 120 years of existence.

When I rejoined the Group in June 2020, I immediately rediscovered the potential of innovation, the high level of competence and expertise that I had met 20 years before. All the ingredients were there, but they needed to be rearranged.

That is why, in January 2021, we launched the Renaulution strategic plan. It has worked, even better than we anyone could have expected. We have prepared the company for growth by securing the development of the best product line-up in decades in just one and a half years. 

Bottom line, we have reached all our objectives for the Resurrection phase 1 to 3 years in advance, and the Renovation phase is well underway, with a set of impressive products coming to the roads very soon.

Today, we are out of the emergency room and back on track, ready to open the third chapter of our Renaulution plan: the Revolution. 

Ready for Revolution 

Ayrton Senna once said: “You can’t overtake 15 cars in sunny weather, but you can when it’s raining”. And today, in the automotive world, it is pouring rain.

 A series of revolutions is reshaping our industry, giving birth to new automotive and mobility value chains in addition to combustion and hybrid vehicles: electric vehicles, software, new mobility services and circular economy. 

This is like moving from playing only soccer, and then suddenly turning to pentathlon. You have 2 choices: either take one athlete that performs all the disciplines, or specialize 5 athletes under the same flag, each with different talents, different training, and different diets.

For us the choice is clear, and it is the second one. We designed a completely different organization and re-imagined our business model.

At Renault Group we want to take this opportunity to position ourselves faster and stronger than competition, with the ambition to become a Next-Gen automotive company. 

Next-Gen automotive company

The new brand driven organization has already proven to be effective, but we want to go a step further. To manage the volatility and fast technological evolution of our times, we designed an agile and innovative organization with five full-fledged, independent, and focused businesses with specialized teams: Power, Ampere, Alpine, Mobilize and The Future Is Neutral.

Each one is built on a homogeneous set of technologies, with its own governance, finance, and results, consistent with the value chain it targets. 

Power

Even though we are fully committed to it, the global shift to electromobility will be a long way. And when it comes to this kind of moves, we better have a plan B and plan C, like in F1.

Combustion and hybrid engines still have to reach their sales peak, and if we look at it from a cradle-to-grave perspective, going all-electric is not that obvious. Thus, the mission of the POWER Team will be to continue developing innovative low emissions combustion & hybrid vehicles under the Renault, Dacia, and Renault Light Commercial Vehicles brands, each with their dedicated organization and governance. 

Alongside POWER, we are creating the Horse Project, a leading worldwide Tier 1 supplier of combustion & hybrid powertrain technologies. It will design, develop, produce, and sell all powertrain components and systems with state-of-the art technologies. From day 1, it will address strong customers such as Geely, Volvo, Nissan, Mitsubishi, Proton or Renault Group. 

Renault & Dacia brands

Going back to the brands, they will still be key and continue to pull the business. 

Renault is going to grow mechanically in the next 5 years thanks to a completely new, uplifted, and global line-up. Even with the sharp rise of the electric vehicles offer thanks to Ampere, Renault’s combustion engine range will continue to grow in volume and margins worldwide, with a 2% growth per year on average over 2022 - 2030.

Renault will be the first of our brands to become 100% electric in Europe by 2030, and it will also be the last to remain combustion and hybrid due to its international presence in South America, India, South Korea, North Africa and other countries. 

Dacia is one of the Group’s golden nuggets today: double digit profitability, on the podium of personal and smart customer choice, and one of the only European mass-market brands still growing in a depressed sector. It has a unique business model, very hard to replicate. It combines a design-to-cost engineering, industrial footprint in countries combining cost competitiveness and high-quality standards, and an agency-like distribution with half the costs of other volume OEMs.

The plan to keep Dacia growing and improving is quite straightforward. Dacia will boldly enter the medium-big cars segment, based on smaller segments cost structure and platforms, giving the brand the chance to double profit pool coverage and increase turnover. The brand will also contribute to reinvent the combustion engine value chain through the cooperation with Horse Project, by developing breakthrough powertrains adaptation for alternative and synthetic fuels. All in all, Dacia will remain Dacia, just a bigger version of it. 

Ampere

Ampere is the first electric vehicle & software pure player born form an OEM disruption. This company will develop, manufacture, and sell full electric vehicle passenger cars, with cutting-edge software technology, under the Renault brand. It is the way for us to re-energize Renault in the new era of electric and connected cars, projecting it into a new dimension.

What makes Ampere unique is that it combines the best of both worlds. It has the solid shoulders of a legacy OEM with 120 years of experience in car making and 15 years of experience in EVs and the growth perspectives of a pure player, thanks to a lean organization and the focus and agility of a pure EV player.

As a full-fledged OEM, Ampere will solely concentrate on the EV and software sport, which is completely different from the traditional combustion engine and hybrid one.  It will be autonomous, but not isolated. We see it as a front-runner within the Renault Group, opening the way for the whole company.

Backed up by the strong high-tech manufacturing ElectriCity pole and outstanding EV value chain coverage of the Group, Ampere will be a growth story. We plan to reach 1 million EVs produced for the Renault brand in 2031 and cover 80% of the EV market profit pool. 

Alpine

In the last two years, everything has changed for Alpine. It went from being in a dead-end, to become a full-fledged high-end car company, bringing together top-notch team of 1,000 engineering, high-quality and flexible manufacturing, selected distribution, and an ambitious racing program, including its comeback to F1. 

But the best part starts now. To take Alpine to the next level, we are developing a complete line-up, fully electric by 2026 and ready to take on new markets outside Europe.

We want Alpine to become the first high-end zero-emission global brand with a racing pedigree. It will be a unique asset to attract affluent and car-enthusiasts’ consumers and a go to markets where people have good purchasing powers. 

Mobilize

Among the new territories opened by the ongoing automotive revolutions, the emergence of new mobility is one of the most exciting. That is why we launched MOBILIZE - BEYOND AUTOMOTIVE to tackle new business opportunities. It opens huge opportunities as the market value for financing, mobility, energy, and data services is expected to double in Europe by 2030.

 Mobilize is built around a leading financial services company, Mobilize Financial Services (ex RCI), and this will be the foundation to grow and develop mobility and energy services. What makes it different from any other automotive brand, is that it comes from the service to the product, not the other way around. It offers financial, mobility and energy services, all of them aggregated in one-stop-shop for all customers and purposed-designed vehicles are the last ingredient. None of our competitors has a comparable value coverage, activating similar value drivers. 

The Future Is NEUTRAL

The fifth and last sport is circular economy, a market that is likely to generate double digit growth and profitability. To win in it, less than a month ago we launched the first the first 360° circular economy company in the automotive industry: The Future Is NEUTRAL. 

THE FUTURE IS NEUTRAL is an open platform working for the entire automotive ecosystem, to offer unique procurement to OEMs and suppliers, to provide affordable and eco-friendly parts & services, and to propose certified training and consulting services, for everyone. It is designed to accompany the entire industry in the shift towards circular economy.

 Thanks to it, we are reaching unmatched coverage of the circular economy value chain. We already covered 50%, and we aim for 90% in 2030.

Renault Group

At the end of the day, Renault Group is a team of teams. The Group structure will become lighter and focus on being the brain giving strategic orientation and long-term planning, supporting the units on business agnostic tasks, coordinating and scaling where it makes sense, promoting innovations across businesses and keep all the parts together, including the relationship with the Alliance. 

With a horizontal approach 

One of the driving principles of this metamorphosis is the conviction that the new automotive world requires a horizontal and eco-systemic approach when it comes to invest, create and scale new businesses and technologies. We cannot do it alone with vertical integrations anymore. We must learn to play horizontally, adopting a collaborative approach with the best players in each relevant ecosystem. To co-invest, co-develop, and co-create. This is the second principle that has driven our metamorphosis. There are many advantages, and the network of leading partners that are participating in our different projects is the proof of the quality of our initiatives and that this approach works.

For instance, GEELY, working with us on the Horse Project to sell combustion and hybrid engines to the industry. Or Vulcan, Terrafame and Managem, with whom we work to secure our raw material needs on the EV value chain.

Or Valeo, the technical and manufacturing partner that will allow Ampere to be the first OEM mass-producing a 200kW electric motor without using rare earths.

Or again outstanding partners like the two major tech players Google and Qualcomm, to create game-changing technologies that will enable the development of Software-Defined Vehicle, including Centralized Electronic Architecture and Car OS.

Or the OEM partner that will contribute to launch FlexEVan, a game changing EV & software-defined family of vans allowing real-time, end-to-end operations monitoring and data-driven fleet management.

Counting on our people

We know that Renault people are our main asset, so we want to do this transformation remaining true to our tradition of social innovation, but up to date! We will allocate up to 10% of the capital to our employees. This will contribute to foster a new common culture oriented to value creation.

On top, we want to be the first company to create a 4.0 management tool, with a digital twin allowing more speed, transparency, and breaking the traditional silos.

Let me give you some examples of what we are doing concretely. Firstly, we are the 1st OEM to completely digitalize our product development process to reduce time and costs. To do it, we partnered up with Dassault Systèmes using the 3DEXPERIENCE platform. It’s a game changer for our suppliers, engineers, and purchasing and finance people, as it represents at least a 4% yearly productivity increase. Secondly, we created an industrial metaverse powered by Google Cloud platform, with a control tower allowing real-time management and AI based decision making. And this is already operative.

This is not about buying software suites, but rather about in-depth strategic partnerships with some of the leading providers. Nobody has done that before with such a holistic approach.

Cash Talks

This new corporate architecture will allow us to improve our financial performance, targeting benchmark profitability, free cash-flow generation and return on capital employed.

 Based on growing and cash generating businesses, our plan is ambitious, but we know we can make it in the light of the current macroeconomic context. The Renaulution plan foundation will be accelerated by external fundings and partnerships enabling to access key value chains, boost growth and innovation while reducing capital requirements.

All of this is one of the most progressive re-engineering projects of the recent years in our industry.

Now, Revolution!