Renault Taps on Shanghai Centre to Produce EVs to Match Up with Chinese Brands

Competition from China entering Europe was a wake-up call for Renault. It forced the company to realise that its automotive development approaches can no longer compete on speed or cost.  

French carmaker Renault Group is leveraging its Chinese development center in Shanghai to create new electric vehicle models and release them in markets outside of Europe. The company plans to reduce production costs and develop faster by using the knowledge it learned in the mainland China market.

For decades, it was common for Western carmakers to come to China to teach them about manufacturing techniques and transfer technology. But it seems the tables have turned, as now European manufacturers want to learn skills from Chinese markets.

It could be because China has become the largest producer of electric cars, producing 64% of the world’s electric vehicles (EVs).

The business opened its Advanced China Development Centre (ACDC) in Shanghai last year to create electric cars (EVs) for the European market, with around 200 employees working for them.

Vincent Piquet, chief financial officer at Renault Group’s EV company Ampere, stated that ACDC is becoming a significant engineering center helping them produce cars to sell globally.

The Shanghai operation is helping develop battery model cars for Ampere and Renault to sell in non-European markets. Renault has a market in over 100 countries, primarily in Europe. The company’s other main markets are South Korea and Brazil.

Competition from China entering Europe was a wake-up call for Renault. It forced the company to realize that its automotive development approaches can no longer compete on speed or cost and reassess its survival skills.  

Renault created a more cost-effective version of its electric Twingo car in just 21 months, much faster than the previous three-to-four-year cycle, with the help of the Shanghai center. The model costs less than €20,000 (US$22,646).

Renault wants to produce electric cars for less than €20,000 because there is mounting cost pressure from Chinese producers, who often have a 25–35% pricing advantage over their European competitors.

They have such a dramatic cost difference that China controls 80% of the world’s production of lithium-ion batteries, giving its domestic producers a competitive edge.

The Shanghai center made history by producing a new electric vehicle model for Dacia, Renault’s low-cost brand, in just 16 months, the fastest model development.

The company expects its cheaper EV model to compete against Chinese automakers Nio’s Firefly and BYD‘s Seagull in the European markets.

The pressure on European carmakers is increasing. The market share for Chinese-made BEVs in Europe has grown from 1% in 2019 to over 50% in 2023, forcing other manufacturers to reconsider their production and EV pricing processes.

Renault has set a goal of reducing EV costs by 40% by 2028 with the help of the Shanghai development center, which is quite a mission impossible through conventional European development techniques.

The company also plans to double its EV sales next year from less than 100,000 units it made the previous year to accelerate its growth in the European market.

The company’s establishment of Ampere as a dedicated EV branch with aggressive growth ambitions (doubling sales volume annually from less than 100,000 units) is a perfect example of how manufacturers are reorganizing their business models in response to the increasing Chinese competition.

The French carmaker is in talks with Chinese parts supplier to help them establish themselves in Europe. The company also formed a joint venture with Chinese auto supplier Minth Group to produce battery casings in France, which started production in 2023.

The logic behind all global suppliers entering Europe will force the manufacturers to reduce their production costs due to increasing competition.

With Chinese EV companies gaining the popularity for its lower production costs, smart features, and cutting-edge batteries, Western companies need to level up their game to match Chinese brands.