Renault SA (RNO) Earnings Call Transcript & Summary

Hello, and welcome to Renault eWays. Thanks for connecting. My name is Henry Samuel, and I'm delighted to be your host today for a session in which we'll discover Renault Group's E-TECH hits, its top assets and technologies in terms of electric vehicles. So over the next hour, the Renault teams will present each of these greatest hits in detail. But first, to introduce the session, I'm pleased to welcome Renault Group's CEO, Luca de Meo. Hello there, Luca.

Hi, Henry. How are you?

Just before I leave you the floor, a couple of questions. I know one that's been in the news this week everywhere is that French President Macron visited the Renault site in Douai in northern France on Monday. How did that go?

It was a great event. I think that everybody, and the president especially, was impressed by the level of competence, experience and also the level of technology that Renault has when it comes to electric vehicles. And it was the first visit of a French president on the site since 4 years. So it was a big event for everybody. And yes, this project gives a lot of hope to the people to the regions of the country. So it was good to see.

Historic moment. One other thing, very cool set here. What's the thinking behind that?

Yes. We're going to talk about electric cars. We're going to talk about how to make electric cars popular, so electric, popular: ElectroPop. And you see the inspiration from some of the music shows we used to look at -- watch at in TV when we were kids. So that's the inspiration. And I think it's very cool.

ElectroPop, I like it. Luca, over to you.

Thank you. So today sets an important milestone for us at Renault, and I would say also for the made in Europe. And beyond the symbol, it is, I think, a strategic choice with a taste for challenge. We're creating a compact, efficient, high-tech ecosystem. It begins with the story of electricity. We are talking about three plants in the north of France, which we will bring together to become one of the biggest and most competitive electric manufacturing facilities in Europe. We'll add to that a battery factory with a capacity of up to 24 gigas. By the end of 2024, this industrial ecosystem will create 700 additional permanent jobs, employ a total of more than 5,000 people and produce more than 400,000 electric vehicles. we will connect the electricity to our mega factory in Cléon, potentially delivering 1 million E-TECH engines for hybrid and pure electric vehicle yearly. Our Cléon plant will be the symbol, I think, of a successful transition from the era of combustion engines to the electric modules. It will require the up-skilling and re-skilling of more than 1,300 people. And to complete the loop, batteries will then be repurposed and recycled in the Re-Factory plant. With our partners, Veolia and Solvay, up to 80% of the strategic minerals recycled from our end-of-life batteries will be reused in new ones. So this resource-conscious short-loop system contributes to sheltering us from the unreliability of the global supply chain. So all in all, we aim at achieving the greenest mix in Europe for the Renault brand. We are preparing to reach up to 90% pure electric vehicle sales in 2030. Group-wide, by 2030 again, we're very confident we'll be way above the CAFE regulation, including under stricter limits than the current ones. We have worked a lot in the past year. We have created the conditions for our competitiveness in Europe, including in France. So how did we pull it off? First, we have been doing it for a decade now. Electrification at Renault is a continuum, it's not a complete shift. Since 2009, we have invested over EUR 5 billion in electrification and plan to invest EUR 10 billion more in the next 5 years without counting our Alliance partners. We have, of course, gone through the negative profit years. But we have the technology, including the components, the platforms, the experience and the [ software ]. When classic powertrains are becoming less and less competitive due to stricter regulations, we have divided the cost of batteries by 2 in the past 10 years and will divide it by 2 again in the next decade. On top of return on investment, 10 years of experience also means lessons learned, that data collected and, of course, performance improved. We have just crossed the threshold of 10 billion kilometers traveled by 400,000 Renault EVs. Our 6 electric vehicles were built on 7 generation of platforms, multi-energy and EV-native. And you'll see 2 of them today. Three generation of batteries have been powering our EVs since the beginning, all of them safe with in-house Renault innovation, guaranteeing no leaking. We monitor over 320,000 electric vehicles in real time and collected over 300 terabytes of data just in the past 12 months. That's the largest battery data set available to any OEM in Europe today. Our experience also means smart allocation of resources. We know what we are doing. When it came to selecting our battery chemistry or choose whether our platform would be multi-energy or native, we had no doubt. We went for pure EV-native. We know it's more efficient and the best choice to deliver on our customer expectations. Take, for example, our e-powertrains. We are the first OEM to have developed its own e-motor, no magnets, no rare earth, based on electrically excited synchronous motor technology. It combines power and sustainability. Beyond ZOE, we'll keep improving our efficiency, thanks to smart innovative technology such as axial flux. We're quite proud to be the first OEM to announce the introduction of this technology right after Ferrari with its SF90 Stradale. And same goes for the platforms. By 2025, we'll produce over 1 million electric vehicles every year within the Alliance on just two of them. One is entirely dedicated to our high-end and sport EV vehicles and one is made for our affordable compact vehicles with a super cost-competitive battery and a high level of carryover from other models. And we'll extend our value chain control by introducing our own power electronics, partnering with leading-edge European expert, STMicroelectronics. Leveraging their know-how in semiconductors and power electronic systems, we'll work together to integrate their products and packaging solutions in our battery-operated and hybrid vehicles. This technology means lower battery cost, more kilometers per charge, shorter charging times and reduce user cost. Concretely, they will contribute to reduce waste of energy by 45% and cost by 30% at e-powertrain level. Our battery strategy showcases this combination of experience, control of the value chain and smart allocation of resources. First is about experience. Through time, we have developed in-house battery expertise from cell to pack. We have our own cell validation plan, developed our own battery management system and connection box. We are among the very, very few volume OEMs to do so. It allows us to get the very best out of our batteries and to prepare for the next step, the highly cost-efficient wireless battery management system. We mastered the entire value chain, including the battery life cycle. We are one leap ahead when it comes to recycling and creating short loops from battery minerals to copper from our e-powertrains. We have a structure dedicated to our recycling activities called Renault Environnement. We have an industrial site dedicated to scale it up. We call it the Re-Factory in Flins. Our business unit mobilized will leverage it all and generate revenues around energy services. Our only missing part was so far cell chemistry. And we'll show you today, we have a plan to get there. We've also made bold standardization choices within the Alliance to unleash competitiveness. Just by relying on the nickel, manganese and cobalt chemistry and one unique cell footprint will cover 100% of our launches across all segments for Renault Group on a yearly base. At cell level, we offer two thicknesses. That way, our batteries will be either affordable for urban and compact vehicles or highly performant for our higher-end or sporty models. By 2030, we'll drive our cost down by 60% at pack level. We'll reach below $100 per kilowatt hour in 2025. And we plan to be below the $80 per kilowatt hour while preparing the arrival of an all-solid-state battery technology by 2030. For our customer, this chemistry choice delivers a very competitive ratio of cost per kilometer with up to 20% more autonomy compared to LFP solutions and a much better recycling performance. When we do not go in-house, we partner up to secure both capacity and value generation. We are securing the production of 1 million electric vehicles by 2030 made in Europe from battery sourcing to vehicle assembly. Our historical and strategic partnership with LG Chemical goes on and will provide the battery for our upcoming Mégane. Two partners will be joining to ramp up our production. Envision AESC will provide us with an efficient, affordable solution for our CMF-BEV vehicles, starting with Renault 5. This battery will be assembled in France with a carbon footprint reduction of up to 35% compared to the current ones, which are equipping the ZOE. As for our high-performance batteries, we are investing with a partner, Verkor, specialized in low-carbon battery cell production. We'll jointly develop and produce battery cells and module prototypes in an innovation center, which we'll be building in France next year. By 2026, we aim at manufacturing high-performance batteries in a best-in-class gigafactory, targeting 10 gigawatts for Renault Group. So optimal decisions for product design, efficient production setup and EV life cycle management, smart partnerships, we'll lead the energy transition and make electric cars very, very popular. That's why we named the all-event ElectroPop. In the '90s, electro music emerged on the global scene. And French iconic bands gave the French touch to the scene. Democratization is the Renault touch to electrification. We bet on iconic design and aim at the top of the charts. ZOE, R5 and more models to come are designed to hit the core of the market. That's where they can make, we believe, a true difference and have a positive impact. And we make them in ElectriCity, at the heart of Europe, true to our roots, creating value for us and our stakeholders. That's the way our music goes. So stay tuned. I will now pass on to our top people, our top experts. They will go deep into what we intend to do, how far we'll go on the value chain. And now I will hand it over to my friend, Henry.

Thank you very much indeed, Luca. And of course, we'll be seeing you just a little later on. But for now, on this ElectroPop theme, as promised, we're going to dive deeper into these E-TECH greatest hits that are really at the heart of Renault's EV strategy. And we're going to start with our very first E-TECH hit, and that is batteries. Hello, and welcome, Gilles.

Hello, Henry.

So when it comes to electric vehicles, obviously batteries take center stage. So what are the main challenges today facing Renault in this area?

Well, in an electric vehicle, batteries represent 40% of the total cost; e-motor, 10%; platform, 20%; and 30% for the rest of the car. So controlling the cost of the batteries is, therefore, paramount to developing affordable battery electric vehicles but, of course, with no compromise on quality, performance and safety. Thus, as Luca said previously, Renault is committed to working closely with its partners with a co-development approach. This enables us to control our costs and performance throughout the value chain.

Tell us about some of your targets.

Well, we are working to be the first to cross the line between ICE and BEV. As we did with our current EV lineup, over the last 10 years, we are aiming to halve the battery cost again within the next 10 years. And we target to double the energy density at cell's level at the same time.

Sounds very ambitious, Gilles. Now we're going to stay with batteries and dive even deeper into this crucial issue, if you will. And for that, I'm going to hand over now to Sophie Schmidtlin.

Hello. Having produced and sold almost 400,000 EVs in 10 years and more than 1 million, including Nissan, Renault has a unique experience in battery technology and in related customer behavior and requirements. Based on this strong knowledge, we have chosen to focus on the NMC cathode for upcoming lithium-ion battery developments. So why does Renault consider that NMC is the best choice for the coming years? Because NMC features better electromechanical properties compared to other technologies. It offers the best customer benefits and the best cost/performance ratio for the entire Renault lineup, including the A and B segments, better range on the WLTP cycle, better performance at lower temperatures, better aging over lifetime and an improved economic value during recycling due to the intrinsic residual value of nickel, manganese and cobalt. Based on this choice for the cathode, Renault will follow two NMC-based chemistry development paths in parallel: an affordable path optimized for adequate range at the lowest possible cost for the A and B segments; and a performance-oriented path with an increased energy density for long-range and fast-charging applications for the C and sporty segments. For the affordable chemistry, Renault will take a big step forward starting from 2024 on the new Renault 5. By offering an optimized solution using high-voltage cells and a robust design, we will give the R5 an EV range of about 400 kilometers on the WLTP cycle with a competitive cost below $85 per kilowatt hour at module level. The performance-oriented chemistry on the other side is suited for long-range and fast-charging applications. What we call the Gen 1 performance will make its debut on the all-new Mégane next year, allowing a range of at least 450 kilometer WLTP in its 60-kilowatt hour version. Then by 2024, we will introduce an evolution of this technology, which we call Gen 2 performance. It will be featured on our sports cars application, reaching a 700 watt-hour liter energy density at cell level and ensuring fast-charging capabilities. And from 2026, in order to further reduce charging times for a typical 15% to 80% charge from 20, 25 minutes down to 12 minutes, Renault is targeting a charging rate higher than 4C at usable battery sizes with high energy density. If we now go beyond the medium term, ultimately, the target is to develop the all-solid-state battery technology, which appears to be the real game-changer from both a performance and cost point of view, opening the way towards many technology breakthrough, not only at the material and cell level but also at the vehicle level. ASSB cells are a game-changer for battery technology as the solvent-based liquid electrolyte is replaced by a nonflammable solid electrolyte. And ASSB chemistry is compatible with high temperatures, thus bringing, among other advantages, that are not requiring a high-performance cooling system. I will now leave the floor to Philippe, who is going to talk about battery system.

Thank you, Sophie. Hello, everyone. From an investment viewpoint, the implementation of our cell chemistry strategy requires a firm control of the product diversity. As Luca pointed out in his introduction, Renault has decided to follow the following strict guides: two NMC-based chemistry development paths, one unique cell footprint, two modules, one pack per platform. This standardization initiative will be effective from 2024 and the rollout to our European BEV lineup will be 100% completed by 2028. This will cover both passenger cars and light commercial vehicles. In order to maximize our cost performance, the Alliance will use from 2024 the same affordable chemistry, same cell footprint and same modules. As a consequence, the Alliance will produce more than 1 million vehicle per year with standardized battery by 2030. Let's talk now about the battery pack. At Renault, the battery pack is vertically integrated and our R&D will drive the specification from cell to pack. More specifically, in the case of cells, we work hand-in-hand with our supplier. Thanks to joint development activities with them, we achieved the best balance between performance, cost and safety. But we aim to grow further. From 2022, Renault will take one more step in the integration of battery cell development. Indeed, we will start a co-development, thanks to new partnerships as announced by Luca. And on top of cells, we will improve our battery pack performance gradually from 2024. First, by updating our battery management system, the EV range will be increased, thanks to a new generation of algorithm and software, fully ASIL-D compliant to ensure the best level of safety. Second, by integrating functions, such as cooling into the pack and introducing a wireless BMS, the cost of the pack will decrease, thanks to less parts. To sum up, our target is to achieve less than $20 per kilowatt hour in '24 for the battery pack itself, including all functions, for the best-level battery performance. Thank you very much.

And thank you, Philippe, and thanks also to Sophie. So Gilles, all of this is going to help reach your goals in terms of reducing costs for batteries. So what precisely are your targets today?

Well, Renault's chemistry road map and innovative pack design will enable us to reduce cost of battery packs to around USD 100 per kilowatt hour by 2024 and less than USD 80 per kilowatt hour by 2030. On top of that, we are already working on the introduction of the next generation of ceramic-based solid-state batteries. This will enable us to drastically improve performance and costs compared to the current situation.

And I imagine the chemistry is not the only lever you have to increase efficiency and reduce costs.

No. Of course, you're right. Thanks to our battery management system with proprietary advanced aging algorithm, our batteries will remain powerful, more than 70% of state of health throughout the entire life of the car. And as explained by Philippe, we also have a lot of opportunities of cost reduction regarding the pack design.

So a lot of exciting things going on in batteries. Stay with us, Gilles, because we are now going to move on to our second E-TECH hit. And that it powertrains. So Gilles, what is the state today in terms of e-powertrains?

Powertrain represents 10% of the cost of battery electric vehicle. To increase range and affordability, we can rely on our 10 years' experience to continue to improve our efficiency in this area. As of today, we have already reduced the cost between first-generation ZOE back in 2013 and the new Mégane by 20%. And that's only the beginning.

So what are your key focus areas today?

In terms of powertrain efficiency, we have three areas of focus. First, we will keep on relying on electrically excited synchronous motor, complex name, isn't it, or EESM. This is a very efficient e-motor technology that doesn't require rare earth magnets. We are not starting from scratch. Indeed, Renault has today a lot of experience in the EESM as we were the first to use this technology. And it seems we are right because competitors are now following us. Second, Renault is working on an innovative, compact and smart concept of power electronics. Philippe Brunet will give you more explanation in a few minutes. Lastly, Renault's future BEV will integrate in one single package, no less than the e-motor, the reducer, the charger, the DC-DC and the inverter.

Okay. We're going to have a look now at the action plan to get there. And as you mentioned, we're going to go back to Philippe Brunet.

Hello again. Our first focus area is the e-motor and the reducer. The electrically excited synchronous motor, so-called EESM, has several advantages. First, it is free of rare earth materials. Second, it is the most efficient technology for mid-load and highway driving condition, particularly suitable for the European market. Third, it is an efficient and cost-oriented solution to optimize the energy consumption of 4x4 BEV application. Our next generation of EESM motors will gradually embed new technologies from 2024, like stator hairpin, glued motor stack, brushless and hollow rotor shafts, still pushing for a better efficiency and a lower cost. And on top of these new technologies, Renault Group is working on a very innovative axial flux e-motor developed with a French startup, Whylot. Thanks to its investment, Renault Group has the exclusivity rights for automotive application. We should be the first OEM to produce on a large scale the axial flux e-motor from 2025. We'll start by our hybrids, HEV and PHEV. Cost is expected to be reduced by 5% and up to 2.5 grams CO2 on WLTP would be saved for an HEV B/C segment passenger car. Then the extension to BEV is also under consideration. Our second focus area is power electronics, which includes inverter, DC-DC and onboard charger. This is top priority to us since this system represents the 2/3 of the total e-powertrain cost. Several levers will enable us to improve our competitiveness. The integration of inverter, DC-DC and onboard charger into one unique box produced within Renault Group is one of them, a more compact design, 800-volt-compliant, less parts to optimize the cost. Finally, we aim to use this One Box concept across platforms and powertrain types, BEV, HEV and PHEV, to gain further scale effects. And with the One Box Project, we'll introduce a new generation of power module fitting our needs, so-called wide-band gap, with silicon carbide for inverter and gallium nitride for DC-DC and onboard charger. This will be made possible thanks to a strategic partnership with STMicroelectronics, securing upscale production for cost competitiveness as well as capacity supply. Let's now move to the third focus area, the all-in-one system. Thanks to all previous innovation, optimized design and extended control of the value chain, Renault Group will introduce by '25/'26 an innovative all-in-one system. It will include the e-motor, the reducer and the One Box concept power electronics. As a summary, this all-in-one system will offer, compared to today basis: first, a more compact design, reducing by 45% the volume of the e-powertrain, reallocating to the vehicle cabin the equivalent volume of a CLIO fuel tank; second, a less expensive system reducing by 30% the cost of the overall powertrain, this savings being equivalent to the cost of the e-motor; and third, a more efficient system reducing by 45% the e-powertrain wasted energy on WLTP, allowing to extend the EV range by 20 kilometers. Thank you very much.

Thank you very much, Philippe. So Gilles, again this is all very ambitious. My question to you is how are you going to work to achieve this in terms of manufacturing?

Well, to face the challenges of the production of e-motor and reducer, Renault has already invested to further increase the production output. Therefore, Renault will extend the production of e-powertrain in its Cléon, Ruitz and Seville plants. Moreover, we will industrialize the large-scale production of axial flux motor with next generation of HEV E-TECH. To do so, we will convert our combustion engine plants into e-motor plants. Simultaneous design and process development will reduce our investment to a level of around EUR 50 million, making up to 500,000 units per year. It will also increase process flexibility to adjust to the market's needs.

And of course, you'll need a very solid network of partners and suppliers for that.

You're right. Vertical integration and partnerships are the second lever to increase range and affordability for our electric vehicles. As shown by Philippe, Renault will integrate power electronics vertically by developing advanced electronics competencies. On top of that, we will also internalize the assembly of power electronics components. As a matter of fact, mastering the power electronic value chain, thanks to our partnership with STMicroelectronics, is our strategic decision.

So thank you, Gilles. It's clear that you're obviously building on your know-how and experience and preparing for the next generation and, of course, on the industrial side, keeping a step ahead of the rest. Now we're going to continue, stay with me once again for our next E-TECH hit. And that is platforms. So Gilles, if I'm not mistaken, all of the technological building blocks that we've been talking about can be found in your platforms. And here again, you have some exciting new things to tell us. So go ahead.

Well, today, we are capitalizing on our 10 years of EV experience, in particular with ZOE and KANGOO to launch the two new EV platforms. They are state-of-the-art in terms of both performance and cost efficiency.

What about their characteristics?

These two platforms will enable the Alliance to respond to customers' needs on major segments. For the C/D segment, CMF-EV platform will offer enhanced EV driving pleasure with unparalleled performances. New Mégane is based on this platform. In terms of volume, it will represent 700,000 units at the Alliance level by 2025. For the B segment, CMF-BEV platform will offer the best performance-to-price ratio, thanks to the big volumes of the CMF-B platform, more than 3 million cars yearly at the Alliance level. CMF-BEV will be the platform of the new Renault 5. On top of that, our new platforms integrate our latest software, the electric route planner and contextual adaptive cruise control for better efficiency.

Thank you, Gilles. Now to explain in more detail the benefits of each of these platforms, I'm now going to hand over to Laurence Excoffon.

Hello. Let's focus first on the benefit of CMF-EV platform. The first benefit of this platform is the range. Indeed, the CMF-EV platform offer a range up to 580 kilometers in WLTP with a very low energy consumption. We can offer this performance, thanks to a reduction of friction from braking, bearing and tire rolling resistance; weight reduction, we achieved about 100 kilograms less than the closest competitor; and a specific energy management, so-called energy recovery system. This system is transferring battery calorie to the cockpit and reduce electric heating consumption for cabin comfort. Combined with the heat pump and the thermal insulation of the battery, the range increased by 5% in cool conditions. As an example, thanks to this extended range, the Mégane will do an iconic trip, as Paris-Lyon, 470 kilometers, with only 1 quick stop of 30 minutes, comparable to ICE journey. The second benefit of CMF-EV platform is a great driving pleasure, a smart packaging, improved roominess and trunk volume. It also provides great ergonomics with comfortable sitting position and good real leg room. All the powertrain elements are put on the front of the car, removing all crossing cable from the rear to the front. This creates more space and reduce weight and cost. Heating, ventilation and air-conditioning is also located in the engine bay, creating a thinner dashboard and giving more volume in the cabin. The battery pack, the thinnest of the market, enable a greater roominess. An outstanding smart cocoon effect reduces the perceived noise by 50% compared to the current generation. This result is obtained by putting a patented foam insulation, locating between the battery and the floor, creating an extra soundproofing. The driving pleasure is also enhanced by superior vehicle dynamic setting for confident ride, such as a lower center of gravity and an ideal weight distribution due to battery location, very low steering ratio that brings a quick vehicle response, a better maneuverability and a good agility and a multi-link suspension on the rear, ensuring a stable vehicle and a precise steering. Let's now see what are the benefits of CMF-BEV platform. The first benefit of CMF-BEV is its affordability. This is the first platform that will make BEV vehicle affordable for everyone. The CMF-BEV will allow to reduce the cost of our vehicle by 1/3 compared to the current generation of ZOE. We achieved that thanks to the interchangeability of the battery module and materialization among the platform, a rightsized powertrain offering 100-kilowatt performance at lower cost. And all non-EV components are carried over from CMF-B platform and its 3 million vehicle a year by 2025. The CMF-BEV will be affordable without sacrificing customer performance. The platform will offer up to 400-kilometer range in WLTP and will focus on added value innovations, such as acoustics, driving behavior and plug-in chart. The second benefit of CMF-BEV is its modularity. This platform is built to be modular. We can adjust track, tire diameter and wheelbase. And soon, we can adjust different top hats with different styling, including some iconic designs. Thank you very much for your attention.

Thank you very much, Laurence. So Gilles, it seems that in terms of platforms, Renault can rely on some very solid assets there.

Yes, you're right. As you saw, we have two dedicated EV platforms, enabling us to cover from B to D segments. These platforms will set the new reference for the group's new generation of electric vehicles. We went through the Renault technology road maps towards affordable, efficient and safe battery electric vehicles. For all these technologies, battery, e-motor, power electronics and platform, we have state-of-the-art technologies mostly shared within the Alliance, full setup of partnerships with top players and clear development plan within the Renaulution strategic plan. In one word, we are ready.

Thank you very much indeed, Gilles, for all of your observations. So we've looked at batteries, powertrains, platforms, three areas in which Renault is forging ahead to maintain its leadership. And now we're going to take a look at how all this is organized from an industrial point of view. And that is the subject of our next E-TECH hit, which is Renault ElectriCity. Welcome, gentlemen. Do take your seats.

Good morning.

So Jose-Vicente and Luciano, thank you very much for joining us. Now as Luca de Meo announced, with this creation of Renault ElectriCity, you are really preparing the ground for the next generation of the automotive industry, Jose-Vicente.

You are right, Henry. The manufacturing teams made a great job. We are very proud of them. This new entity for the moment will be three Renault plants in the north of France, Douai, Maubeuge and Ruitz, as well as a strong ecosystem of supplier facilities. It will be very close to the gigafactory of our partner Envision AESC in Douai. Renault ElectriCity will be the largest production center dedicated to the EV in Europe. This industrial integrated supplier, startups and academics enhances the world sector.

Jose-Vicente, can you tell us why Renault Group decided to concentrate its EV manufacturing here in France?

Well, because it's in the heart of the European EV demand. France, the U.K., Germany, Italy and Spain will represent the 2/3 of EV demand in Europe in 2025. By offering made in France cars, Renault ElectriCity becomes the biggest industrial project in France, 100% in the spirit of the European Green Deal.

Thank you. Now Luciano, I'll bring you in here. For you, what are the main benefits of this new entity?

This single entity enables Renault Group to make these three plants the most competitive and efficient production unit for electric vehicle in Europe. With 400,000 vehicle produced per year by 2025, we have created the condition for competitiveness. And this allow us to produce in France at better costs compared to emerging countries.

How exactly is this ecosystem going to improve competitiveness?

Our objective is to downsize the production cost to 3% of the value of the vehicle. How? By strengthening manufacturing quality, thanks to better-skilled workforce by ensuring continuous improvement for all employees during their working time and by implementing just-in-time process in the work organization. On top of that, we will optimize fixed costs, thanks to mutualized resources with the battery plant, utilities, security, wealth management, maintenance, expertise training for all ecosystem, site footprint decrease, minus 40% in Douai plant, shared data and use cases, notably to boost EV services, developing in close solution with universities, territories, start-up partner. In the end, we will produce a profitable B segment in France, achieving a best-in-class manufacturing KPI.

Jose-Vicente, if we could sum up, manufacturing seems to be the key asset here to tackle this challenge of producing BEVs in France.

You are right. Industrial efficiency is key to the competitiveness. To achieve this, what do we need? First, we need to continue our road map to digitalization through [ Factory 4.0 ]. We need to continue to develop the skill of our people. At the same time, we need to continue to remain business-oriented.

Well, with such a large-scale industrial project and a made in France, that's obviously going to be good news for the economic dynamic of the country. Thank you very much indeed, Jose-Vicente and Luciano, for joining us. Now it is time to move on to our next E-TECH hit. And that is battery life cycle. Clotilde Delbos, hello.

Hello.

Thank you very much for joining us. You are Head of Renault's new Mobilize brand, which promotes sustainable mobility solutions. So of course, batteries and the issue of battery recycling, very important to you. Can you tell us about that?

Yes. OEMs are responsible for the recycling of the batteries they put on the market. What has to be underlined is that Renault Group goes far beyond regulation. The group has been working on this issue for 10 years in order to limit the environmental impact of its EVs, preserve natural resources and contribute to the energy transition. We have a fleet of 400,000 electric vehicles, and we are starting to get the first batteries back for recycling. The lifetime of our batteries is higher than previously anticipated. And once they are no longer good enough for the vehicles, they can be reused as a second time and can also extract value at the end of life. Thanks to our very good knowledge of batteries, we found out that we could create value throughout its whole life cycle.

So in concrete terms, how can this EV battery life cycle management actually bring down costs and create a viable business today?

Well, to capture this value and offset part of the recycling cost, we have organized ourselves. The group deploys a full range of solutions along the battery life cycle and is going further on recycling.

Okay. If you will, let's have a look at the solution, starting with a battery's first life.

Through Mobilize, Renault Group's solution for vehicle-to-grid, also called V2G, will allow EV drivers to offset part of their annual leasing cost and Renault to capture recurrent profits related to car fleets. Grid operators have a growing need for power storage solution to balance load at all times. Vehicle-to-grid solutions are one of the most adequate solutions to meet this need.

Could you just remind me and the viewers what V2G means?

Well, this technology enables energy to be pushed back to the power grid from the battery of an electric car. With vehicle-to-grid technology, a car battery can be charged and discharged based on different signals, such as the amount of energy production or consumption nearby. The car becomes a power generator.

And what do the energy companies think about this? And what's their role there?

Energy companies are, therefore, very interested in these services brought by car batteries, which are able to inject electricity to help stabilize the grid. Can you imagine, for example, a car connected 8 hours per day could generate a value potentially up to EUR 400 per year through vehicle-to-grid.

That's a lot. Today, where are we? What have we actually achieved so far on V2G?

Renault has already assembled all required skills to offer V2G services. In Europe, Renault has developed and promoted a solution for bidirectional AC charging that is less costly than a DC solution. Renault has already deployed all grids required to operate an integrated V2G service in Europe; grid connection abilities with demonstrators in the Netherlands, Portugal and France; aggregation and monetization know-how with contracts with energy traders. Renault has also offered an app for smart charging and peak shaving to be extended with further application for V2G. We will reach large scale from 2024, when we will launch new Renault 5.

Now that's the battery's first life. But actually, batteries also have a second life. So tell us about that.

After their first life, batteries may still contain more or less 2/3 of their capacity. Renault, through Mobilize, is finding them new application around stationary storage to manage punctual power need, mobile electricity storage or generators for use in other industries.

And so how is Renault shaping this second life market today?

Renault is pioneering this market and has defined a unique industrial setup to lead this market in Europe. First, the group relies on its dealer network for collecting used batteries. Second, as Renault is an expert with 10 years of EV experience, we appraise their fair value of batteries and optimize second life usage, thanks to real-time technical monitoring and knowledge of second life battery application. As a matter of fact, thanks to an industrial tool with maturity well above others, the group has the ability to refurbish batteries at competitive prices and will repackage the upcoming 250,000 units of ZOE batteries leased by Renault so far.

And how are you going to promote all of this to the market?

Renault, again through Mobilize, will collaborate with car rating agencies, for example, Largus, to broadly communicate the residual value of batteries so that it can be taken into account in the used car market transaction for a value up to EUR 500 per car. This will contribute to lowering yearly leasing costs for new cars by up to 1%. As we have strong relationship with owners of vehicles, we will be able to offer health certificate for state of health monitoring, battery warranty expansion contracts and trading offers made possible by the connected vehicles to reassure owners of secondhand electric vehicles.

So we've mentioned the first life and battery second life. Obviously, eventually, it comes to the end of its life and needs to be recycled. So what are you planning there?

Renault Group already benefits from a robust know-how in EV battery collection and recycling. We capitalize on our subsidiary, Indra, and our partnership with Veolia on lithium-ion battery recycling. We have already recycled 75 megawatt hour cumulative of batteries, half of which in 2020 only. Going even further, the group is deploying a new dismantling facility through its Re-Factory project in Flins. The highly complementary partnership recently announced with Solvay and Veolia will allow the recovering of strategic battery materials, such as cobalt, nickel and lithium, with a very high efficiency and battery-grade quality, so they can be reused in the production of new car batteries.

So from first life to recycling, we've gone full circle. So if we put all of that together, what are the expected savings?

Today, the collection and recycling of EV batteries represent a net cost of around EUR 1,000 per battery. Evolution in our overall battery collection and recycling process will allow Renault Group to divide the net cost of recycling by 3 by 2030 while securing for part of our needs an alternative and sustainable sourcing of battery materials at a competitive cost and preserving these natural resources.

Clotilde, just in a nutshell, in a few words, to conclude, what today are the stakes for batteries?

By viewing batteries through a circular economy lens, with the right tools and ecosystems in place at each step of the battery life cycle, the Renault Group is taking a clear competitive advantage and paving the way towards new sustainable business models and industry efficiency in line with its CSR policy.

Clotilde, thank you very much indeed for this look at the future of the battery life cycle. So we move on now to our very last E-TECH greatest hit, which is the lineup. And for that, I leave the floor once again to Luca de Meo.

So as our top experts have just shared, we embrace change at Renault. We take responsibility developing our own technologies from cell to pack, from e-powertrains to microelectronics, from platform to vehicles. This is our novel bag. This is how we intend to bring modernity in the conversation. Beyond efficiency and competitiveness, this in-house approach gives us actually an amazing freedom when it comes to creating cars. We're freed from classic design and traditional platform constraints. Our vehicles are born electric. They bear our signature, our Renault touch to electrification. Group-wide, we'll launch 10 additional battery electric vehicles by 2025, 7 of them will be Renault-branded. These vehicles will follow always the same principle. They have to be attractive, competitive and contributive to the group's profitability. By 2025, in percentage, the contribution margin of the new electric Renault models will be in line with their ICE equivalents. Our numbers are good, our looks are even better. So let's see. Here are our contenders for the top of the chart. We'll start with two familiar and yet new tunes here onstage. I think you know them. We have taken our bestseller, Mégane, and given it an electric revamping, making a totally new car on a totally new platform. We have taken the iconic Renault 5 and given it a modern electric twist. Renault 5 will be made in ElectriCity in the north of France from battery to e-powertrain to assembly on a totally new EV compact platform. This is today. So let's talk about tomorrow. As you see, we'll make the best out of platform for compact electric vehicles. We will revive another magic, I would say, iconic star. Internally, we named it 4ever to signify our intention to make it an instant classic. And as you see, it won't come alone. We'll also muscle up on our all-electric C segment. And this is on the Renault side. On the avant-garde side, the Alpine dream garage we unveiled in January is coming actually through starting 2024. And I can't really wait to see some electric Alpines on the road. Ladies and gentlemen, with this, I will close eWays. I think we have been open, transparent, hopefully comprehensive on our electrification strategy. Of course, for the sake of time, we had to be selective. Our tech road map does not stop there. We have a lot of exciting new tracks in the studio. Business-to-business vehicles, Mobilize or hydrogen are just some of them. So if you like this format, and we hope you do, you are warmly invited to join us in events to come. Next time we meet, we'll present to you our software strategy. The time after that will show you on our brand-new professional mobility ecosystem, embracing hydrogen, electric LCVs and services. So thank you, and I will now open to the questions.

Thank you very much indeed, Luca. And I should add that all the topics covered today can be found at the website, renaulteways.com, so do check it out. So that brings us to the end of this session. It's been a pleasure to be with you. But do stay tuned because in just a few moments, it will be over to Thierry Huon for a Q&A with the analysts. And then at 1:15 p.m., it will be over to a Q&A for journalists. Thank you all for your attention. [Break]

So good afternoon, everybody. Thank you for being with us today. And after this very rich presentations, I think it's right time to open the Q&A session. So I turn to the phone with on the line.

[Operator Instructions] The first question comes from Thomas Besson from Kepler Cheuvreux.

It's Thomas Besson, Kepler Cheuvreux. I have two questions, please. The first one would be on the Alliance cooperation for the two paths. I think we understood the 1 million figure mentioned. Can you give us a split between Renault and Nissan and the two paths and confirm that Nissan will also operate on the electrified platform, please? So that's the first topic. And the second topic, you increased your BEV share targets for the Renault brand in Europe to 2030 at 90%, which I think previously included PHEV. Could you, on one side, explain why you seem to have lowered substantially the PHEV share? Is it linked with the forthcoming stricter targets from the EU or the need maybe to have more BEV under the Renault brand to keep selling ICE products under, for instance, the Dacia brand in Europe?

Okay. Thank you, Thomas. I think that the first question is for Luca. So about the cooperation with Alliance and the split between the volumes between Renault and Nissan.

Good. Thomas, thank you for the downgrade. I hope that you are convinced that the story of Renault is stronger than you could perceive before. Also thanks to the electric strategy. I think that the fact that we decided on communalizing the battery pack is a major decision in the Alliance. And this shows that the Alliance is working. And I really welcome the fact that, together with our colleagues at Nissan, Mitsubishi, we got to that point. Let's say -- I would say that Renault, it will be a 50-50. I don't exactly know the numbers of what Nissan projects on 2030. But I think it would be a fair split in terms of volumes. Because we have planned, as we have seen with potentially 90% mix of EV, a substantial volume for each 1 of the 2 platform on the Renault side. So I would say probably that will be a 50-50 split. But it will depend also on Nissan's decision on where to introduce electric cars around the world, China, U.S., et cetera. And this is not necessarily on my hands. On the story of the mix, the idea is that we prepare ourselves to really extreme scenario in terms of reduction of the limits and the objectives. So I think it's a safe bet on this. And we have now the arguments and the tools to achieve it. But I also want to say that the E-TECH technology, the hybrid and the plug-in hybrid, remains central to our strategy even beyond 2030. So one of the advantages of Renault is that we can bet on both things. But today, we are clearly stating that we believe in pure electric EVs. And you're right, when you say that probably the Dacia brands will come later in terms of electrification simply because of the cost of EVs. So the E-TECH technology, the hybrids, the plug-in hybrids are a huge opportunity for the Renault brand but more for the Dacia brand to pass all -- let's say, all the regulation that will be established starting 2025 and then 2030.

Thank you, Luca.

Just maybe just a follow-up because there was a question on whether Nissan would use the small platform or not, which was included in my first question.

Yes. I think you should ask to the Nissan guys. Of course, it's an Alliance platform. We're doing the work. We focus on making this platform very, very competitive in terms of cost and performance. As they are smart people, I'm sure that they will utilize this asset of the Alliance. But you should ask Uchida or Ashwani of when and what they want to do. We -- I mean, our job is to make sure that this thing is really competitive. And as Philippe or Sophie or Gilles have explained, I think we have in our hands something that is pretty unique, I would say.

And just to mention on the downgrade, it was part of a sector view, not just you.

I know, it was a joke.

We know it's a joke.

The next question comes from Charles Coldicott from Redburn.

My first one, you've outlined obviously a very comprehensive plan for electrification today. But at the same time, back in January, you set out targets for a substantial reduction in R&D expenditure. So can I ask how do you balance the need to make those savings with the ambition that you've clearly shown in today's proposals? Perhaps you could share with us a figure for your total investment budget on electrification over the next 5 years. And my second question, I think you said that the R5 and the Mégane are going to have a contribution margin in line with combustion engine vehicles. Firstly, was that in 2025, so once battery costs come down or from the launch of the models in 2022? And secondly, what does that assume on pricing, particularly with respect to subsidies?

Okay. Thank you, Charles. First question, I guess, for Gilles, how you will manage the R&D decrease with the budget for EVs?

Well, I think that, first of all, you have to know, and it was said during the presentation, we intend to invest EUR 10 billion in the 5 years to come regarding the electrification. And we can afford that. And we can afford that because we did a huge improvement in terms of R&D efficiency, playing on all the levers. I will name some of them. First of all, we cut diversity a lot by currently on the new project by more than 30%, so a huge saving on that. We did a lot, of course, also regarding validation. And we took benefit of our, I would say, enlarged R&D footprint in best-cost countries. So all in all, plus the program approach that we are developing, that is to say a donor car and then a derivative, allow us to cut dramatically our cost per car, our investment [indiscernible] per car, allowing us to do the development and the energetic transition that we are facing. So I think that we will cap our expenses around EUR 4 billion in the year to come. And I can say that we're going to make it, no problem seen for me.

I think that -- if I may, I think that Gilles is pretty modest. I mean, I remember him showing me the comparison between the money we would spend in R&D and CapEx on the previous generation of cars and the one that we are -- that are part of the Renaulution thing. So it could show me a 40% reduction into the thing, which is pretty substantial. That means that we do the same amount of cars with 40% less money, okay? This is one thing. The second thing you have to consider, and we said that during the presentation, it's been now 10 years that we have invested in electric cars. So one of the good news when I came here was to see that the investment on electric cars were actually behind our shoulders, okay? So we are leveraging the fact that Renault started very early and that platform like the CMF-EV was already mostly invested, which is an opportunity. Third element you never have to forget is that actually we share within the Alliance the investment. So at the end of the day, we have the scale and we share the investments. So that puts Renault in a pretty comfortable position to be able to do a smart investment, let's say, on the thing, get cars in the market, get competitive cars. You have also seen some of the partnership that we have established. So we're not trying to do everything alone but still keeping some kind of control of the value chain of the development because we don't go into simple relation, supplier-customer, but we get into strategic partners. Think about, for example, the STMicroelectronics or the decision we made with Envision or Verkor, et cetera, et cetera.

So the second question regards with the margin and the assumptions that are behind this margin estimation. So Clotilde?

Yes, do you hear me? Yes, what we said, and this is what we have in our plan, is indeed that when you compare same segment between an EV car and an ICE car, our assumption by 2025 indeed is that you have more margin over variable cost both in euro and in percent for EV cars versus ICE car. The assumption in terms of pricing is that, anyway, we're going to improve our pricing power. We have started that. You've seen that already. You're going to continue to see that, believe me. So we're going to price it at the right level compared to what customer would expect for such good cars, as you have seen behind us, both for the Mégane or the Renault 5. In terms of subsidies, we strongly believe that subsidies are not here to stay forever. At the end of the day, if the EV picks up as much as what we think, governments won't be able to put as much subsidies as they used to do in the past. So we have taken as an assumption that it will gradually go down.

Thank you, Clotilde.

There is one golden rule we gave ourselves by developing the product plan for Renaulution is that we don't do car that don't make money. It is as simple as that, okay? So all the cars that you see that we present are all products that are contributing and are not diluting the targets that we have announced during the Renaulution plan in January 14 of this year, just to make it clear.

Yes. The objective is not for it to be dilutive, for sure. If not, believe me, if you have so much EV cars and you're dilutive, it's not a good recipe. So on the contrary, we are very cautious about what is the prospect of profitability of these cars before we push on the button.

Absolutely.

The next question comes from Stephen Reitman from Societe Generale.

Stephen Reitman, Societe Generale in London. And my question is around Slide #24 and about the popular, profitable cars. Looking at your -- the price-to-range ratio you show in these two tables, first of all, with Mégane, which is a fairly imminent car, obviously you're looking at a 5% advantage over your nearest German competitor you show here. I'm wondering about the thinking on the second one for the Renault 5, [ E5 ]. Are you comparing this? When is this model -- when are we expecting the launch of this vehicle? And what is the base of comparison then? And is it against current technology of your competitors or projected where you think they're going to be when the Renault 5 comes to market? My second question is again about a bit more about the discussion about NMC versus LFP technologies, your decision not to go with LFP, even for the more basic -- for the basic vehicles when other competitors seem to be quite prepared to do that and using the -- basically maybe the capacity that's already in place in the industry.

Okay. Stephen, thank you for your question. I hope that I have got it right, especially the first one. But I think it's about the R5 competition, what do you think about the competitor that will come on this segment and when this car will be launched. Is that right, Stephen?

Well, so just -- and the very clear advantage you're showing in terms of range or range per kilometer that you're projecting for this vehicle, how you come to that conclusion.

Okay. I take it.

Okay. So Luca, yes.

So R5 will be in the market first half of 2024 with a range up to 400 kilometers. I think it's -- at that stage will be a relatively unique product. Because of course, the Mégane and the CMF-EV are a kind of a response to the plans of other OEMs that have already introduced product in the C segment, which is the core of the European market. We think we have a car that can stand competition boldly. And we will be able then to tell you in a few weeks or months why we think we have a very, very solid argument to put that car on the top of the charts, okay? But the Renault 5 and the CMF-BEV, for the time being, I believe from what we hear, is a pretty unique project. And this is exactly one of the message of the day. It's ElectroPop. Pop means that we want to democratize electric technology and we're going to do it with that platform. So the whole focus of the platform is to put the right content to be able to offer those cars in the price brackets, on a price budget that is accessible, affordable for the majority of consumers in Europe, although we know that electric cars will be more expensive than ICE but still the Gaussian curve, where the people have money and -- with that car, we hit the right into the middle of it. So it's a pretty unique project. It's a very challenging project from an engineering point of view, from a production point of view, from any point of view. But when I look at the numbers, because now we are in 2021, the car will be out beginning of 2024, so we have a certain, let's say, confidence in visibility of the number and it actually looks good. It looks good from, yes, from a performance and an economical point of view.

Luca, just building on what you said, for the CMF-BEV, we took a very, I would say, pragmatic buffer. Because the underframe of the platform will be fully EV-native because we have a full battery pack, flat battery pack, taking all the underframe of the battery but with a lot of carryover of existing power from the CMF-B. So with this kind of recipe, we can have the best of two worlds, I would say, so a native-type performance in the EV world but also higher volumes so that is to say low cost regarding cost efficiency. So frankly -- and of course, it will go on the same manufacturing line that the EV-derivated cars. So all in all, I think it's very efficient and we aim at decreasing the cost of the global car by 30% comparing to the current way.

And in terms of the decision we made on the product content with 400 kilometers, we have experience with the ZOE. We know very well how the people are using this. And with 400 kilometer, we think it's a good value for a city car, so where you probably will be kind of, let's say, forced to charge the car maybe once a week for the utilization. So we think it's a good value. And at that horizon, we would be in the condition to charge 80% or 300 kilometer into half an hour and then just 2 years later will be lower and lower. So we think that in a few years, we will be able probably to charge 400 kilometers, 300 kilometers in 10 minutes so that then it becomes a compelling proposition for a city car.

Thank you. I think the second question is for Philippe. Why we have chosen to go for NMC instead of LFP?

Yes. So obviously, this is a good question. So in fact, we spent more than 1 year with Nissan within the Alliance to study LFP and NMC. The stake is 10% in terms of cost. This is the advantage of LFP. But LFP has also several disadvantages. So it's 30% heavier. The energy density is lower, at least 20%. This is much less performance at cold condition, where you can lose many, many EV range. And the aging also is not favorable. So this is why, at the end, for the European market, we have no doubt that in terms of customer value and cost competitiveness, NMC definitely is the best choice.

The next question comes from Henning Cosman from HSBC.

Can I please go back to the Alliance and the leader/follower concept that we are still familiar with? It was my impression that Nissan was the leader on many effects of the EV powertrain. I'm slightly getting the impression that this may have changed in the way that you appear to take ownership for a lot of the development as well now. Can you just say if this is still the case in the way we have come to expect at the time when you first introduced the leader/follower concept? And also, I was slightly surprised about your comments with respect to the volume on part of Nissan. Can you just clarify that it's not so relevant for you to know the overall volume of the lines altogether to have a good projection for the cost that you'll be able to achieve regardless of volume? That's my first question, please. The second question is with respect to when you mentioned the 3% production cost savings. If you could just give us the basis for that and by which time you're planning to achieve that. And then finally, my third question, if I may, just on the cost or the margin parity between ICE and BEV by 2025, where both Clotilde and Luca, I think, talked about contribution margins or margin over variable cost. If you are prepared to do so, would you please also make an indication for EBIT margin? Does it make a big difference when we take into account also the fixed cost will then by then will the BEV still very dilutive to EBIT margin by 2025?

Okay. Thank you, Henning. So the first question is about the Alliance. So I guess, Luca, it's for you.

Yes. I'll take it, yes. I think that -- I'm not sure that it's this old story of leader/follower is somehow in danger with what we're doing. I think that Nissan is cooperating on all the technology on the platform, the components together. That's why we decided to have the same pack. Philippe, for example, is obviously working every day to pack together the thing. Nissan will come, I believe, with a similar kind of announcement soon. You will see there is a lot of consistency between the two things. But it's also true that we had to take responsibility on the control of the value chain for EVs when we say that we want to become, let's say, greenest brand as Renault in Europe. And electric vehicles, in my opinion, will be democratized in Europe, yes? Because Europe is the place for small cars. And small cars, more affordable cars are cars that people can afford. It is as simple as that. That's why we took the initiative of pushing the CMF-BEV because we want to propose cars that can go really in volumes, okay? When you sell a car at EUR 20,000, EUR 25,000, you have much more chance than selling a car at EUR 40,000. It's as simple as that. And this was always, if you want the kind of, let's say, traditional Renault as a pop brand, to propose things that people could buy. So I think we are exactly on the sport we know how to do. So within the Alliance, we took a little bit leadership on that. But we are working every day -- and every day, every single day. And I will leave our friends from Nissan and Mitsubishi to announce their strategy. I think it's fair. On the volume mix, of course...

I can be -- if you allow me, I can be more specific regarding leader/follower scheme. So we are exactly where we said we will be. First of all, the CMF-EV platform homeroom is in Japan. So no doubt about that. And so we are following the evolution of this platform. And the CMF-B platform is -- the homeroom in France, in Renault. And so of course, the derivative, the EV variant of the CMF-B, of course, is led by Renault. That's number one answer. Number two is all about the powertrain. We have a common powertrain for the CMF-EV platform. And this technology will be reused on the CMF-BEV on the Cléon plant, of course, with a lower output. We will go from 160 kilowatt down to 100 kilowatt, but I would say with the same technology and the same assets. And of course, we have also all the inverter, DC-DC and charger that are common. So at the end of the day, now we add the batteries with same layout for the cells, the same footprint for the cell, so same supplier. And so that's a good news at the end of the day because we will bundle all the volumes. And so we stick to the leader-follower from what I was describing.

So maybe I have to complement on what Gilles was saying. I mean, you have to understand that the news period we're getting into the Alliance is about each one trying to do the best to be able to propose to our partners a very good solution instead of standing on political decision on who has to do work, et cetera, et cetera, okay? So we focus on coming out with projects that will be attractive from a business point of view to Nissan and Mitsubishi and vice versa. I think this is the best way of doing things. We -- in -- on the 14th of January Renaulution, we said that we had an internal market of -- in the last 3 or 4 years within the Alliance of EUR 35 billion, okay? The target is to enlarge as much as possible. But to do so, you need to come with good solution. And for example, the CMF-BEV, I think it's a very, very good solution. The fact that we decided the similar model, same supplier is going to increase that kind of internal market also. This is the way you have to see the thing. And why I say that the volume of Nissan are not, let's say, I don't know them in detail or it doesn't mean that they are not relevant. They are very obviously very relevant. But if I'm able to structure a project that can self-sustain itself on the volume of Renault, everything that will come on top, okay, will be a benefit. So it's up to the Nissan people to decide or Mitsubishi people to decide whether they want to use, where, when and which models. But I have to secure that the project is already running on our legs, okay? On the cost -- production cost, I just want to make a thing. Because on the chart, you had something that was not very clear. We were actually talking about the production cost being 3% of the whole car, not minus 3%. So I think that was something that was a little bit confusing, but I'll leave it to the specialist.

Okay. Luciano, do you want to add something on the manufacturing costs?

Yes. Thank you for the question. So what I would like to explain, as Luca, the manufacturing cost must achieve 3% of the total cost. This is completely the aim of Renault ElectriCity. So first, we will continue to improve our [ indirect cost ] via our regional social agreement. We decreased our social cost and we optimize social cost. This is one of the aim of Renault ElectriCity. Secondly, we will increase our member quality under the process in order to decrease our fixed cost. And this is the second part, the fixed cost. Fixed costs, we have first decreased the size of the Douai plant by 40%. We will work to commonize all fixed costs between our three plants, Ruitz, Douai and Maubeuge. And also, we will develop with our battery plant to reduce this cost by mutualized waste management, utilities, some HR topics. All these items will be mutualized in order to reduce fixed costs between our ecosystem.

Thank you, Luciano. So the last question, Clotilde, about the...

Can I add one thing if you want me? I mean, Henning, you have to understand the ElectriCity thing almost as a kind of, let's say, a European or a country project, okay? Everybody is trying to, let's say, engage to demonstrate that we are able to produce competitive electric cars in France, okay? So we have -- I have to also, let's say, thank, for example, the unions for what they have done in ElectriCity. So we have signed a historical deal with all parties, all unions subscribing that. We are getting the support from the region. We're getting the support from France on this. We're getting the support from our supplier that accepted to be integrated basically in our plan to reduce logistic costs. And we will probably get also support from Europe, I wish. We are asking for, let's say, to have -- and we were in conversation the beginning of the week personally with the French President Monsieur Macron about creating a green free trade, Green Deal zone, as an example of what concrete the Green Deal can represent for Europe. This project qualifies for being one of the symbols of the European Green Deal, of course, for the automotive industry. But that concept could be applied for other industries. So you understand that this is a kind of an orchestration of a lot of initiatives to demonstrate, okay, to take up the challenge of making a competitive car in -- electric car in Europe.

On your last question, obviously, the difference between margin of our variable costs and the operating margin is dependent on the volume. If we achieve the volume we have in mind and we think they are quite normal, they are not that ambitious, we do believe we could do more than what we have in the plan as we said in January. We strongly believe that our whole EV range should be at the level of what we announced for 2025. So in my view, this is dependent on volume. But you looked at the car, they are very, very good in our view. There is no reason why they would not be successful. So at the end of the day, they should be where we said we should be.

Can I just clarify to you? Is that okay? When I believe the 2025 is a group target, right, so are you saying that BEVs will be at 5% margin as well within the automotive business? Is that fair to assume?

Yes, that's the -- well, the automotive -- yes, the EV margin -- the EV product will benefit from RCI contribution, too. So at the end of the day, the whole package of the operating margin of these EVs should be at the level of 5% by 2025, yes, that's what I'm saying, at least.

Your next question comes from José Asumendi from JPMorgan.

It's José, JPMorgan, a couple of questions, please. The first one, maybe for Luca. Can you talk a little bit more about the electric vehicle demand you're seeing in the budget segment? I think this is a segment where you have -- you probably will be the leader. I don't see many product contestant in this segment. Can you talk a little bit about the Dacia Spring? How many orders did you get? What kind of reception you got across the products so far? And how does this help you in your strategy in the mid-term? Second question, I know the focus is on EVs. And obviously, I'm coming out with the message that Renault has a bright EV future platform-wise and product-wise. However, we are running into a first half result season, where I think expectations are still Renault is not making money, Renault is still not generating cash despite having reduced the fixed cost base by 20%, which is one of the biggest contrasts I've seen in an investment case, so very much looking forward to see the numbers in the first half. The question is very simple. I think, can you talk a little bit about the work you're doing to commonalize the volumes across the key platforms? And maybe the question is a bit more for Gilles, the work you're doing there and the work you're doing, Luca, also on the commonalizing volumes on -- across Renault, Dacia and Lada on the common architectures, how much progress you've done there so far.

Okay. So the first question, I'm not sure I have all the elements or the latest elements for Dacia Spring, et cetera. But I know that a couple of weeks ago, we were already above, let's say, 10,000. They are telling me now that the orders in May are 16,000. So the thing is going really well, okay? Obviously, the only issue we have is semiconductors, et cetera, et cetera, because you have issues everywhere. So I think that the demand is above our current capability of production. But we think we're going to easily hit our objective with the Dacia Spring because the car is a very unique proposition. It's simply the most affordable electric car. So if you if you want to actually minimize your budget to buy an electric car, you buy a Dacia Spring. There is no alternative in the market. So I think it's going to be like a kind of a Chinese drop, pam, pam, pam, coming every day and for a long time, I'm sure, okay, independently of the, let's say, performance of the product or the range, et cetera, et cetera. So I'm pretty confident. In terms of how the electric market will develop on the small car segment, yes, it's difficult to make projections. But it will also depend from, let's say, our ability to propose things that people want to buy. So are you going to buy R5 because it's electric or because it's the R5 and it's a cool car? So I think we -- on a product like this, we combine the emotional side of making an attractive product with the rational side of, "Oh, I have to buy an electric car,"okay? So we know that by 2025 we'll probably be kind of forced by the regulation to be at 25% mix of electric cars. So that's -- we are now doing everything that is, let's say, in our hands to achieve minimum that kind of mix and making money, which is the other issue. You don't have to forget, José, that Renault also has the E-TECH, the hybrid and plug-in hybrid. This is a huge advantage for us because we -- if the mix changes a year or the things delayed, et cetera, et cetera, we'll be able to sell cars. And this is not true to all OEMs, okay? So the fact that 7, 8 years ago, some, let's say, engineers decided to bring the technology of Formula One and creating Renault hybrid with the E-TECH was -- it's a kind of life insurance for us, okay, so -- and it will continue beyond 2025, will continue beyond 2030, I'm sure, not only in Europe, maybe on other brands like Dacia on international markets. So I'm pretty confident that we will be able to respond to any mixed deviation on powertrains. We are investing now in hydrogen, for example, on commercial vehicles. So I feel confident -- actually confident from that side. I know that I have not precisely answered to your question. But if I say a number, it's -- we have to do a minimum of 25%, that's what we know.

Gilles, for the platform?

Yes. So regarding platform policy, it's very simple. It was announced in Jan. We are concentrating for personal cars on three platforms, so CMF-B with the new derivatives that we are announcing today with the CMF-BEV, 3 million cars a year by 2025 at the Alliance level; the CMF-CD, the same 3 million cars by 2025 at the Alliance level; and the CMF-EV in '25, 700,000 cars a year at the Alliance level. So that's for the platform. And we are concentrating everything, that is to say that Dacia, Lada are moving on the CMF-B platform for the next-gen Duster or the Bigster that we also announced. That is also to say that when Dacia or Lada will need technology, for example, for the E-TECH, the hybrid, we will be able to transfer this technology very easily to those brands. So that's the answer for the platform. Secondly, the way we are developing cars, we are bundling cars in so-called program which I was just mentioning that at the beginning of this session. And that's very important. Because thanks to that and reducing of the diversity car-by-car, we are able to cut the [ entity cut ], as said by Luca, by 40% between, I would say, past generation of Renault and Renaulution cars. So at the end of the day, I think that we have a quite efficient setup regarding carryover carrier costs but also very efficient setup to face changing, especially for Dacia brand.

I have to say, I mean, just to, let's say, complement what Gilles said that the program, Duster, Bigster, also what we call the CMF-B [indiscernible] is actually one of the most impressive project that I've seen in my whole career. You have 85% carry-across and commonalization on the different models on 4 industrialization, on 3 brands, on 7 models, et cetera, more than 1 million cars a year, so it's -- And you would be shocked by the profitability of this thing. So because we did a very smart LEGO game and creating all range of cars for different brands for different markets, it's one of the best projects that we have in the house. Yes, you agree?

I agree.

The next question comes from Horst Schneider from Bank of America.

I have just two follow-ups and then one more strategic question. The first one is on your calculation regarding battery costs and how much have come down. Just would be interested to know what's your assumption on raw material costs if they remain stable and you think that it's really a realistic assumption. Then the second one is just I want to make sure that I got this right, when you talked about power electronics and batteries. So I understand at the moment that, for example, in 2030, you don't need any supplier anymore in power electronics, except STMicro. And also batteries, you will be able to produce all the batteries that you need yourself, just a yes or no answer is fine. The last one, strategic one, that's on financial services because you have not talked about that at all. I could imagine at the moment the problem is that the EVs are subsidized and that also drags down the used car EV prices. So how do you deal with that? What is, at the moment, the profitability of financial services on electric vehicles? And how do you expect that to develop?

Okay. So first question is about the raw material prices assumptions in the battery cost. So Philippe, I guess, this one is for you.

So for the battery cost, of course, we are depending on the market. So we know that the most sensitive point is the cobalt. So our target is clearly to use as much as possible the content in terms of cobalt. This is what we are doing. We hope to be free cobalt by 5 or 6 years. This is our target. And for the rest, as you understood, we are strongly working on the pack itself because there is also a lot to do. And trying to achieve less than $20 per kilowatt hour at pack level is quite challenging, but this is what we are going by '24.

Thank you. So the second question relates to the suppliers for the power electronics that we need more than STMicroelectronics for doing this power electronics box.

So here, the intention is to have the overall control of the power electronics. Of course, Renault is not able to produce chips. So this is why we need these partnerships. We will not be able also to produce components such as PCB. So we will still be relying on some partners. But let's say that the overall design will be mastered by Renault for the power electronics.

Thank you, Philippe. And then the question about the finco and the...

There was a question also on the battery capacity.

Yes, sorry. I forgot this one.

Yes. I can answer this. I mean, of course, the whole plan with Verkor, with Envision and also with the continuation of collaboration with LG basically is saying that we try to secure 1 million car production with the battery. So 1 million car, you can do the math, it's enough to achieve the EV mix that we have declared for 2030. So we feel that from now to 2030, with the announcement that we have made, we will be able to, let's say, to cover the needs in terms of battery supply for our sales. But the thing will not stop there. I think we have -- we still have other discussion with other players to see if we can secure even more. Because I have the feeling that there will be rather more scarcity of battery capacity than actually oversupply. So we keep working. But we have right now what we need.

Yes. On the finco, I'm not sure, Horst, what you say that the EV is a burden on the finco. Let me remind you a few things. There's two ways -- we have been exploring two ways of selling EV cars, either by selling them completely with the battery inside or selling the battery separately, leasing the battery versus selling the shell. We started with that last scheme in order to reassure people about the durability, I would say, of the battery. And on that portion, actually it's RCI who's leasing the battery. And as we said earlier today in the presentation, actually the battery has more value than what we thought at the beginning. So we now end up receiving batteries back, which have a value which was not counted at the beginning. So it is a source of benefit for RCI. And on the other one, RCI is not holding the residual value of the car anyway. It's done except in U.K. but not in the rest of the world. So there is no problem with a potential lower value of the used car. And as we also said in the presentation, we strongly believe now that we're going to be able to increase the residual value of the battery if we do the right marketing towards the rating agency and make them understand the value of the battery for the second life, and even after that, when you recycle. So we do believe that it's going to enhance the residual value of the used car in EV. So all in all, I don't see a problem of burden on the profitability of the finco because of EV.

Can I say -- add one thing to what Clotilde say? The whole story of Re-Factory, second life, third life, Mobilize, et cetera, et cetera, it's a fundamental aspect and the uniqueness of Renault on this field. I mean, when I came here, I kind of discovered that, for example, Renault was basically the biggest recycler of materials in France. And since then, we have organized ourselves to structure our control of the second life and third life. And the Flins project, which is a very ambitious project of creating the biggest circular economy platform in Europe, will serve the purpose of making our electric cars more competitive, okay, and more profitable, yes? So we will go very, very strong on, let's say, managing the second and the third life with V2G and relationship with some of the energy companies to recycling, et cetera, et cetera. So please keep in mind, maybe there's no time to be -- to go very much in detail. But look at that part that we don't look at because this thing will have an impact on the competitiveness of electric cars. And Renault is very, very well positioned on the issue. There was a question, let's say, about subsidies, et cetera. I just want to tell you, for example, on the Renault 5, we have agreed at the beginning of the project that we would be able to sell the cars in a profitable way at the same price of today's ZOE without the subsidies, okay? So we have already integrated in the project that the subsidy will be at that horizon, 0, okay, so -- and we're talking about 2024. So if they continue, like in some cases, in some, let's say, in some countries, that would all be a benefit for us, okay? So it's already integrated into the thing that the sub-venture will be 0. Of course, we would welcome the government to keep pushing. But we think that the government should probably put more money upstream and on the infrastructure, if you want my opinion at this stage.

The next question comes from Arndt Ellinghorst from Bernstein.

It's Arndt Ellinghorst, Bernstein. And thanks for the really good content today, Team Renault. I have one question. It's maybe for Luca. And I wonder whether you have some insight concerning future emission regulation, especially in Europe, and whether we're moving from driving emission or pipe emission to a more holistic approach of well-to-wheel emissions for the auto sector. And really in that context, whether politicians or policymakers are willing to shift the responsibility of ESG and renewable energy towards carmakers at the end. And of course, everyone's involved here, the miners, the utilities, the battery makers to make -- to create really a circular sensible area of personal transportation. So I just wonder what your thoughts are concerning future regulation and well-to-wheel emissions.

Thanks for the question. I will actually maybe share the answer together with Gilles, who is very much involved into this whole discussion of regulation, Euro 7. But as a principle, we -- in the way we develop this kind of ElectroPop strategy from Renault was to assume that we should be in the position not to be, let's say, accused of greenwashing in any way. So we're going to do, from an industrial point of view, from a sourcing point of view, from energy, let's say, offer to the customer point of view, we're going to try to hit all the -- tick all the boxes, okay? That's the principle. Because we know very well that if someone is charging an electric car with a bad, let's say, environment mix, then some days, the discussion will emerge again. So we're going to try to do it in the proper way. And it's part of the project, okay? We have a strategy for the decarbonization of the supply chain, for the decarbonization of the industrial thing, for the chemistry of the battery, for the offer in terms of energy with Mobilize. So that's the starting point from us, okay? Now I think that the discussion on regulation is a bit -- it's a kind of -- today, it's a smaller perimeter. Maybe you can say what you feel is the latest status of the discussion.

Yes. So coming back on the life cycle analysis, this is fully embedded in our reflection, I would say. Because today, doing everything in France make fully sense. Because today -- as of today, electricity in France is around 60 gram per kilowatt hour, very close to Norway or Sweden and I would say 1/10 of what it is, for example, in Poland. So that is to say that making the batteries and the cells in France and the global car in France make fully sense regarding CO2 effectiveness, number one. Number two, of course, we are facing many regulation. We are about to have the global safety regulation that will take place mid-2022, then we are preparing, you know very well, the Euro 7, just speaking about Europe, early 2026. And this is still under discussion. So we are waiting for the final regulation end of this year. And we are pushing in order to, I would say, in a way, make hybrid ICE cars still homologation-compliant. That's key. Because that's, for us, a way to serve our clients, of course, some of our brands, especially Dacia, but also to have a smooth transition between ICE world to full BEV world. And that's for us, key because moving all our assets to BEV, you see today that we are ready to do it, but it will take some time. So of course, we need to little smooth this transition and to be ready. But Renault, with these two legs, I would say, E-TECH hybrid and E-TECH BEV, is fully ready for this transition.

The last question comes from Stuart Pearson from Exane BNP Paribas.

Yes. Thanks for the great presentation. So just two questions then to finish on, maybe just coming back to this profitability because it gives me -- I'm a little bit confused because it feels like you're being a bit more conservative on the profitability message. I mean, I think this is a company, albeit a [indiscernible] management team that did talk about even having parity by 2022 at one point, and I'm pretty sure in January are a little bit more optimistic, so -- and it sounds like the cost side is going quite well. So is it fair to say that you're just being very conservative on pricing, particularly at that point about the incentives going away? Or is there something else that's going on that perhaps makes you not so optimistic on the ability to perhaps reposition the price point using the electrification, which I would have thought would be a key opportunity? And then on the cost side, I guess, the aspect of the strategy that surprised me a little bit is the vertical integration side or at least there's something ElectroPop that's being focused on affordability and getting costs down rather than perhaps a premium approach. I would have thought you'd be more in a rush to outsource things like motors and power electronics to a Nidec, Valeo-Siemens, et cetera, to leverage their scale rather than take that in-house. But maybe that's just something that follows later on. So interested on your thoughts on that as well.

Okay, Clotilde, on the...

On the profitability, we must have been misleading towards -- sorry about that because there, nothing has changed in terms of profitability versus what we said in January 14, on the contrary, for most of what we're talking here about. So yes, we're always conservative. That's a trademark, I know. But there is nothing that is going in the wrong direction in terms of EV and in terms of many other things, by the way, versus what we said on the 14th of January. So we said that we will get parity. We said that we will get profitable. We also confirm today that on the margin over variable cost, we're going to be above ICE. That is a fact and it's already the case, by the way, in some occasions. So no, our profitability will be where we said it would be, around 5%, by the end of 2025.

Gilles, do you want to take the last question?

Yes. In fact, we are just at the beginning of the electrification history. And the reason why we want to integrate is the keywords is integration. And Philippe explained during the show that we wanted to integrate completely all the power electronics. And in order to master that, we rely on Tier 1, one Tier 1 bringing in this box, the second one is invertor and so on and so forth. So we have to control completely this value chain. And that's the reason why we are teaming up with STMicroelectronics because those guys can bring the, I would say, essential component that we cannot do. But at the same time, we will master the full integration, saving a lot of costs. So that's the reason why we want to go in. And on top of that, it's not brand new for Renault. Because you know that for hybrid, we are already mastering the development of power electronics. And in our Cléon plant, we are assembling the power electronics for our E-TECH hybrid technology. So we aim at doing the same for base technology and bringing a lot of value to the company.

Okay. So it's 1 p.m. So I think it's time to close this session. Thank you very much, all of you, for having been with us today for this eWays event. Thank you, ladies and gentlemen, for all your questions. And I guess that we will come soon with new events during the second half. Have a good day. Thank you very much.

Thank you. [Break]

Right. Good afternoon, and welcome for the specific Q&A session for the press. We are together -- we're going to be together for around about 45 minutes. And we already have received quite a lot of questions.

So we're going to start immediately with the first question coming from Spain, [ El Mundo, Fernando Llamas ]. And that's quite a global question for you, Luca, I guess. "Can Europe compete against China in the manufacturing of electric vehicles?"

I think this what we will have to demonstrate for -- with electricity, let's say, in the north of France or other projects that some other OEMs are developing also. This is the challenge. Having said that, I believe that it's not a question of competing against another country. It's more, let's say, about being able to do things that the people buy at a competitive cost with the right profitability. Europe will be one of the places where electric technology will be -- let's say, will have to be successful also for the regulation. And moving around cars in the current context, including the regulation that will be made on CO2, will force supply chain to be located in the different regions of the world. So let's focus on making sure that some projects are very competitive and successful like the one that we are -- we have announced today rather than talking about competition between systems.

We might, perhaps, complete this answer with another question coming from Spain with [ your -- Vicente, from -- Armando Francisco Fernandez from RBC ]. "How to -- how do factories have to be transformed in order for Renault to be a benchmark for electric vehicles?"

Well, our factory has started to transform some years ago. And how? And we -- first, we have an assembly flexible line from the Alliance [ in position ] that we are integrated in the same line, the platform -- ICE platform or EV platform. And also in assembly line, now we produce, for example, ICE vehicle that Micra and ZOE plan in the same line or we can produce [ PSUV ] or ICE vehicle in Spain in [ Bayoles for car tour ]. And also assembly battery, we have a standard [ in plan for ] EV, assembly battery or assembly hybrid in [ Bayoles ] or Turkey or now in Korea. That's -- we have a standard we have started some years ago. And in function of lining up of the new vehicle, we'll adapt the plan for this transformation. And also, [ we have a rapport, we have a fight to become benchmark ]. And with this reference, we develop all the standard.

So next question coming from the U.K., John McIlroy from Auto Express. "So hi, Luca. With these new retro-inspired models like the 5 and the 4ever leading the EV push, where does that leave recognized nameplates like CLIO and even ZOE? So will you make subsequent generations of these cars? Could you have a best CLIO and a ZOE in the same model portfolio?"

Yes. I mean let's say that the -- this is the kind of question we are asking ourselves because we have a perspective on the product planning that is solid and detailed and granular with the Renaulution, let's say, product lineup. And we are actually right now thinking what we do the next -- on the next thing. Most likely, product like the CLIO will stay. We will see in which kind of form, but we haven't made a firm decision on every detail of the products beyond 2027. Let's put it like this. So that's the work of the next few months because the urgency was to put the Renaulution products in -- on the rails, make sure that they work, make sure that they have the right performance, the right cost and the right profitability. And I'm pretty happy for the work that, collectively, we have been doing in the last 12 months because I think in the -- on the next wave, Renault will have probably a product lineup that's so strong that we have never had that in many, many years. Now that's my feeling as a car guy. Let's put it like this. The ZOE, we have already announced that by the end of 2024, when, let's say, it will end up its life cycle, we will discontinue the car. But that naturally will be replaced by the products -- some of the products that we have presented today. So we don't have worries to have a hole in our offer. Yes.

Good. A question for really probably to mobilize and you, Luca and Clotilde, from Reuters of France. "Is Renault looking at investing at -- in Ionity? Is the fast charge not the weakest point of the electric system or ecosystem today? And how are we planning to remedy this problem?"

Okay. So yes, the -- obviously, the charging, not only the fast charging, but the charging is a key element of the penetration rate of EV among the automotive industry. what we're doing in Mobilize already, we have a subsidiary, which used to be called Elexent, which is now Mobilized Power Solution, which is indeed advising currently corporates, cities and other corporation, I would say, on how to best install charging infrastructure at the best price, the best dimension, if I may say. They already have 5 subsidiary around -- among Europe, covering 11 countries, which is basically 80% of Western Europe needs, and they're very efficient in B2C. They're now going to go -- sorry, in B2B. They're now going to go to B2C, and that's what they're starting to develop. But you're right, it remains a hole in this, which is the fast-charging infrastructure on highways, for example. And obviously, we cannot not look at any opportunities together with other OEMs or energy company or even infrastructure company or the state themselves. We have to make sure that our customers will not be concerned about their ability to charge whenever they need their cars. Do you want to add something, Luca?

Yes. I think that, of course, the issue of infrastructure is critical. I think with all the announcements made by the different OEMs, nobody can blame the automotive industry not to have invested on electric cars. I think we're going faster than the infrastructure, and this is an issue, okay? You have 3 parts in infrastructure. You have the -- people will -- like mobile phone, they will charge at home or in the office. So this is one part, okay? That's exactly the part that Clotilde was referring to with Elexent, which is an excellent company that is taking care for companies and the -- now private consumer so that they get everything done quickly even before the car comes to the house and has been delivered. This thing, I think, we can -- let's say, we can control, and we are doing the job. We probably need from the authority to lower down the administration process that makes painful for many people to install the chargers at home, in their garage, on -- in condominiums or in the parking of the condo. We need simplification from an administrative point of view. I think that the part of public charging industry, it is not our job. It's very complex. Everything is different. And when we have 10 of those things standing on one street, then the discussion will start to whether we are perturbating the whole quality of life in the cities. And the third part is the superchargers on [ highways ]. My personal conviction is that superchargers should be where the people are used to charge their car today. So they should be in petrol station, okay? And I think that we need to get out of this kind of catch-22 chicken-and-egg discussion between OEMs, authorities, infrastructure and everything. So my wish, my dream is that we could be sitting at the table all across industry to agree on how to share, even together maybe with the authorities, the pain and the investment that is needed to create a network of supercharger, European supercharger so that the people can -- don't have the anxiety that they cannot go on the weekend to the seasides because they don't think that the car will be -- able to be charged, okay? So I think that we need to find opportunity to discuss with other industry and fix the problem urgently because the volumes are -- electric cars are going like this, and the infrastructure is not as fast. This is the reality of the story. And we are ready -- we are very open as Renault to discuss. We know -- we're discussing with Ionity. But it cannot be only one project covering the whole thing for Europe, I think we need to open different streams. And we are very open to discuss with authorities, with the energy industry, with the infrastructure industry, with the other OEM to mutualize the -- let's say, the investment.

Right. So the next question is for you and your team of experts, Gilles, I guess. [ Vicky Parrot ] from the U.K. "When will we start to see lighter batteries in mainstream EVs? Does Renault still expect to have cobalt-free batteries in the near future?"

Well, that's mainly the reason why we're choosing NMC cathode batteries rather than LFP. It's because it's 20% more efficient in terms of energy density. And at the end of the day, when you have a look to the global efficiency of the synthesis, the holistic view of the car, the more or less 10% gap difference in terms of sales between NMC and LFP is completely [ delayed ], I would say, by this weight problem. So that's one of the key reasons for us to stick on the NMC routes, #1 answer. Regarding cobalt-free, yes, we are working on that because, of course, you know that cobalt is quite expensive and very volatile. So we are working and not for the coming generation to -- for the year 5, but I think that before 2030, around 2026 or 2027, yes, we aim at introducing cobalt-free cells.

Perfect. Jumping on the next very technical question regarding battery, I guess, for you, Philippe. "Can you already tell us what type of battery format you will use, round cell, prismatic, pouch?"

Yes. So for this one, this is kind of -- some people think this is a kind of a religion, but we have no religion, in fact. So for example, for full HEV, we are using prismatic cell. And for EV at that time, we are using pouch format. And honestly speaking, until now, we find some advantage of the pouch format, and we intend to keep it because in a very simple way, the cell can be very hot under pressure. And the pouch cell allows the cell to breathe more easily than the prismatic. So this is why we intend to stay on the pouch format. And from now, we see an advantage in terms of costs.

Right. So let's go back to some figures. Tara Patel from Bloomberg, "Can you please elaborate on how the EUR 10 billion will be spent and when parity on margins will be reached with ZOE or Renault 5?" So let's start with EUR 10 billion, how the EUR 10 billion will be spent? So it's the breakdown or...

Very technical. I don't have the split of the thing. I think it would be -- we can actually give this information. But that's -- we know that we will have to develop the platform of CMF-BEV. We are investing on the electric powertrain. But we're not going to give a detail of the mix of the thing. So it's -- there's no point in doing that, I think.

Well, I think that what we can say is we have in mind -- for the hybrid side of it, we have, in view, 3 generations. So the current one in the street, next generation to be launched on the next C-SUV and the one after. So that's for the -- for, I would say, the hybrid. And for the BEV technology, it's exactly what you've seen during the presentation. So we have a clear road map, big on the power electronics side, battery side but also on the platform side and the motor. So all in all, it's balanced, I would say, between all the levers.

Yes. And then you have to consider also that our friends from Nissan, from the Alliance are also invested. So I think -- I'm not saying that you need to double this thing, probably even more, but this is -- this will be there, let's say, message and communication when they will present their electric strategy.

Great.

Right. So the next question is on the -- on battery life cycle. "What's your answer to the fast innovation cycle in the battery management? How do we manage to avoid the loss of value of the battery through the life cycle?"

Well, I guess on that one, that's all what Mobilize is about on the energy side. I think what we have discovered, thanks to our tenures of experience in EV, is that at the end of the life of the vehicle itself, the battery still has 2/3 of its ability in terms of recharging. And hence, it's opened many, many doors on what we can do for the second life of the battery, and that's exactly what we already have started. We announced some project a few weeks ago in VivaTech, where we are partnering with a start-up in Germany to have mobile battery storage solution with batteries. We're also working with smart island, trying to have a full scope of energy solution from electric EV to stationary storage. So there's many, many, many things that we can do with the second life. And then obviously, you have the value at the recycling base. So all that, we're still discovering, and the perspective are tremendous because there is many people -- and we're talking with many energy people with cities, with authorities, with corporate, who are willing to find a second source of energy with secondhand batteries.

All right. Now the next question is from [ Lucy Novel ] and about the statement of selling 90% of electrical for the Renault brand by 2030. The question is, "When do you plan -- or do we plan to reach 100%? And do we also have figures for the whole Renault Group beyond the Renault brand, basically?"

Yes. I mean -- I think the focus is to state that Renault -- as we did in January, that the Renault brand would be one of the greenest, if not the greenest brand in Europe in terms of mix. We know that by the decision we made on the platform for Dacia, we are able to easily transfer technology from one brand to another when it's needed to comply to -- for Dacia to comply with not only the regulation but also the taxation in different countries. So we have a lot of flexibility. But the priority for Dacia will be to get affordable cars and compliant cars in terms of local, national, let's say, physical systems and regulation. And Renault will push very hard on electric cars. We have the products. We have the platforms, yes. And this is the idea. Now when are we going to get to 100%? I would say after 2030. But if it's '31, '32, '33, it doesn't really matter, okay? So I think that the important thing is that we have decided to make of Renault a very EV-, let's say, oriented brand as much as we have decided for Alpine to be a full EV brand, which I think is also another statement.

I think, Luca, that current value for Dacia is -- plan is 10% for 2030. So -- but of course, we will be flexible because [ thanks -- of the ] usage of the same platform, we can adapt...

You mean on electric?

Yes, on electric.

Yes, yes. But then you have a lot of hybrids.

Exactly.

Yes.

All right. So moving for -- to Russia, Autoreview from Igor. "ElectroPop is for Europe. Is it only for Europe or actually other regions also involved? What -- and more ordinary for Russia? What about EV strategy in Russia?"

Yes. We haven't come to -- let's say, to a precise and granular strategy, for example, for Russia, although we know and we are in discussion with authorities and our people and our team there because there are movements also in this direction for the Russian market. Renault will be -- and then the -- and Lada would be -- out of us will be prepared to answer to potential development of the market in this direction, I think quicker than the other. We are the market leader there, as you know. So we have to show the way. So if there are a possibility, we'll find a way. The good news for [ all of us ] is that we have, I think, made a very, very big decision on platform localization. The CMF-B that we will localize in Togliatti will be a very, very flexible platform, where we will be able to add technology if it's demanded from the market.

Right. So a question from cleantechnica.com. "The BEV market in Europe is moving towards 20% this year. Following this growing trend, Renault will need about 2 million BEV in 2026. Will you be able to scale up your production capacity and to provide the needed 150 gigawatts of battery cells?"

I don't know the calculation, but if 90% is 2 million, 100% is 2.2 million. Normally, with the Renault brand, we do 1.2 million, 1.3 million. So you're actually assuming that I'm doubling the volume of Renault in Europe from now to 2030, which will be a very, very good news for us because we haven't planned that. So I think that the numbers are slightly different. We think -- we are securing with the current strategy, with the announcement we made today that we'll be able to source for 1 million car production in Europe. So it's about -- it's around 40, 50 gigawatts, yes. And that's enough for the volume projection that we have. But as I said before, we will continue to scout for capacity because I have the feeling that in Europe, we'll be more likely to have a kind of, let's say, scarcity of battery capacity rather than overproduction of it. So we continue to scout for sourcing and supply.

Good. So we have another -- quite a technical question from Autocar, [ Casey Krauss ] in the U.K. "Does the current generation EESM [ you're slipping ] for -- sorry, for external [ expeditions ]. The future plans announcement mentions the development of brushless technology by 2024. Will this be brushless EESM? And can you briefly describe how that will work?" I guess the question is for you, Philippe.

Yes. Thank you for the question. So as you know, today, on the EESM, because we have no permanent magnet, we need to allow the current to enter in the rotor. So this is done currently by some brush. So there are some contacts. We know that we can improve and to optimize our cost by a brushless technology, which is not, I would say, completely innovative, maybe a little bit more in the case of automotive. Just look to the other electric motor around you, and you will see that brushless is not so innovative. But in term of automotive because of the reliability and the -- you have to secure this performance for at least 15 years, this is a little bit -- we need to manage it a little bit more carefully.

All right. Good. Next question is from Peter Sigal from Automotive News Europe. "Regarding the Renault 4ever and coming Alpine small EV, will there be derivatives of the Renault 5 under the program strategy that Gilles has mentioned at some point?" And there's another question after that. "With the 90% BEV mix by 2030, what do you think the mix of plug-in hybrids will then be?" So let's start with Renault 5 derivatives, 4ever, Alpine and then...

Yes. There will be a -- there will be derivative, yes, yes. That's basically the message. So we have the platform localized. We have capacity. So we have planned relatively conservative volumes to make sure that the project could run on the right cost base. Let's put it like this. But we have opportunities and we are ready -- and many models are still in the kitchen. But that's the sense of the announcement today. And with the answer about the -- let's say, the 90% electric mix, of course, the rest will be hybrid. That's relatively obvious. And you have to consider that the 90% is for the brand Renault, the 100% would be for Alpine. And that will have a different mix, okay? And that will -- really benefit of the E-TECH technology, where we are working very hard to get the cost down. So at that [ origin ], I think we will be able, through the hybrid and also maybe the plug-in hybrid, to offer to Dacia customers a product that is below the thresholds that are, let's say, considered by local fiscal system or regulation. This is the opportunity for them.

Okay. The next question is from...

One of the things that I'd like to say is that we talk a lot about EVs, but E-TECH is really a [ perm ] in the Renault world. So when I came into the company, I actually looked at the thing, and it's actually a very impressive technology. We believe that in the next 18 to 24 months, we'll be able to get to a level of cost of this technology that is comparable to the leaders because structurally, the engine -- the technology is a very, very smart, technology without gearbox with the modularity on the battery. With the same concept, you can move from a hybrid to a plug-in hybrid. This is a very, very smart technology. So I think the engineers of Renault did a fantastic job. They worked 7 years on the thing. We're not going to give up on the hybrid and plug-in hybrid. This thing will accompany us way beyond 2030, I believe.

So the next question is from [ Alessia Racunar, Credit de la Serra ]. And it's all about autonomous driving. "Is there still an autonomous driving strategy? And how does it develop along with the overall electrification of our portfolio?"

Yes. So [ Alessia ], I think we -- today, we try to concentrate on the electrification strategy. I think that today makes the point that Renault is not late when it comes to EVs. On the contrary, today, we -- I think we have been able to prove that with arguments and facts and decisions that we've made that we could pretend to be on the podium, a leader in this energy transition. The autonomous driving discussion is another discussion, okay? If you want my personal opinion, we've been back and forth with that in the industry whether this thing would be disruptive or not. I think that it will be -- you always have to look at 2 things when you engage in one technology. One is, what is the benefit for the customer? And second, what is the -- what -- how much this -- the customer is willing to pay for this technology? And third, what is the business case of this thing, okay? Sometimes difficult to generically say that autonomous driving is a very, very clear business case in general. But there are some applications that could be actually interesting and where there is a business case. Think about platooning for trucks. We know very well that downtime is a problem for trucks. It means money. So if you use platooning, you avoid accidents. You reduce 10%, 15% consumption. There is a business case. And I'm sure that in a case like this, we work very, very well. And in fact, all companies in the truck sector, they are working on such kind of solution. And we are looking for application in the automotive industry that will make a lot of sense. This is one thing. The second thing is on the autonomous driving, there will be different step. Normally, we talk about a level 2, 3, 4, 5, et cetera, et cetera. But in fact, you can already, and you see that in our cars, integrate part of this package to really improve the experience, the safety of our customers. Think about predictive cruise control thing. This is very good to avoid getting fines or even reducing consumption of the product. It will be applied on electric cars at Renault. So I think that you don't have to look at it at the -- only at the end destination of this trend but also what we will be able to introduce on our cars for the benefit of our consumer. I don't know if, Gilles, you want to add something.

No, I -- well, just perhaps a few comments. Frankly speaking, it's very difficult to find a business case for level 3 features, that is to say end of features. But nevertheless, we are going to introduce a level 2 plus, which is a predictive system that will be introduced on the MEGANE and next-generation C-SUV. That will be really state of the art. So stay tuned, and we will show you that in a few months.

Good. So a question from Julien Marion, Agefi-Dow Jones, about profitability. "You target parity in percentage with ICE cars by 2025. Does that mean that electric vehicles' operating margin will be over 5% at that time?"

Now that's the target. That's clearly -- what we said, as I said just earlier, there is no reason why we would decide to put on the market cars which are not making the same profit as what we used to do. So the target for the group is 5% is a minimum by 2025. So there is no reason why we would be less demanding on our EV cars by that time. So...

Okay. Good. Next question from [ Joakim Olivera ] from Portugal. "Wireless charging has apparently been dropped by OEMs due to the difficulty to keep the minimal level of efficiency. What about Renault? So what's Renault position on that one?" So Philippe or Sophie or...

So I can start. So wireless charging, this is a kind of -- as you explained, this is a kind of old and long story. We tried many times. We had many, many adventure in the Alliance, so it could be efficient. But because you have nothing, no contacts, which, of course, very, very elegant, but the fact is that this is very expensive. And this is the main -- today the main road block. And the fact is that to transfer the energy, there is some limitation. So to summarize, cost is the first road block. And second, the energy transfer is quite limited. So this is why until now we gave up, but maybe one time we will succeed.

Good. The next question is from Colombia, but it refers to South America, actually. "Do we have plan to introduce R5 and MEGANE in Latin America?"

Yes. We will -- we're discussing that, and there are no plan for the time being. I think our priority in Latin America is to provide our teams with the, let's say, the core products that they need to make their operation profitable and successful. So there are discussions going on as we have had, for example, in Russia or in Turkey or in other places where we are kind of reengineering our presence on international markets with a clear driver now ahead, which is to make those operation more solid, more stable and more profitable. So I think we have good ideas, and we are discussing with the teams there to -- we have actually a plan, which is pretty clear. It doesn't include, for the time being, such kind of cash. But who knows what happens, right? Importing cars directly from Europe in South America, it's not an obvious thing from a profitability point of view, even locally.

Right. Question from Belgium that's about Whylot and the manufacturing of Whylot. "So are you planning to manufacture the Whylot e-motor in Cléon?"

So of course, this is an innovative technology. So as we said, thanks to our agreements, we have the exclusivity in term of rights for the production. So we will produce it by ourselves. And as Luca explained just at Ferrari, we will introduce it but for large scale. And I believe that the place for this e-motor, which is not decided today but should be in Cléon. I don't know if, Jose, you want to add something about...

No. I think you have been very clear. It's under study.

Perhaps a word on the actual flux e-motor. Frankly speaking, that's another [ negative sum ] because it's very rare that when we want technology, you do a strike because you can lower cost, you can increase the efficiency by a lot and at the same time, you reduce the size of the motor. So first introduction will be on E-TECH hybrid for, I would say, third generation. And then we are also contemplating the possibility to bring this technology on BEV cars.

Right. So next question from Jorge Reis, LusoMotores. "The whole car market talks about technology, electric mobility, autonomous driving. How is Renault going to maintain the passion for the car for those who still look at the car as a provider of emotions without just being in front of a computer on wheels?"

Look, I think that the old name of the game for car guys and -- like us, they used to call us petrol heads, so that's -- is actually to keep emotion into the thing. And when you look at, for example, what we are planning to do with Alpine, okay, it's exactly this. It's the challenge of being able to introduce new technology like [ E-TECH -- but ] still keeping the car an emotional object, okay? That's -- I have personally, absolutely, no doubt that this is feasible. And I -- if there is a signature in my -- personally, in my whole career was to always keep emotion in the equation. I always try to do products that were emotional for you because when they are emotional, people are ready to pay. It goes beyond rationale. So don't worry, we have clearly integrated that in our reflection.

Good. Next question from Italy regarding STMicroelectronics. "When will these new components be included in your power electronics?" Philippe, back again to you.

Yes. So as explained, we will introduce 2 breakthrough in term of technology. Actually, the silicon carbide is already well known, even if it's not so common. But we will also introduce the nitride -- gallium nitride. And what we are preparing is for our third generation of HEVs, which is expected to be launched by end of '25, beginning of '26. And then after, we will extend it to all our EVs since, as I explained, our power electronics will be completely suitable for all types of powertrains, means HEV, PHEV and BEV, which is for us a guarantee to achieve the -- I would say, the scale effect and to achieve the cost competitiveness, for which, of course, we are looking for as a top priority.

Good. The next question is from [ Niko Dimandi ] from Industria Italiana. "Is it possible to know more about electric motor without rare earth?" So...

So I don't know what is more.

But can you even further develop to what we explained? For example, have we been doing that for a long time?

Yes. So maybe it's not a technical course. But let's say that in the market, we have many -- 2 types of e-machine. The first is the most common using permanent magnets. So it means that you don't need to have the -- to enter the current into the rotor. So this is why they have permanent magnets. And permanent magnets, you need to use rare earth. So this is all the stake, and this is very expensive. And there is an alternative which is called EESM, very complex name, where you don't need the rare earths, and this is the choice we made.

10 years ago. 10 years ago now.

10 years ago.

Right. So go back to Spain. So [ Javier Barcaga from Ical Agency ] in Spain. "What role will the factories of Cassis and Lyon play in this new electrical ecosystem?" So I guess it's for you, Jose-Vicente.

Well, I think 2 months ago, when we visit Spain with Luca de Meo and Jean-Dominique Senard, we are very clear of our strategy that the Spanish plant will be focused on electrified vehicles. That's mainly SUV, [ PSUV ], including new hybrid engine, probably a new E-TECH for [ civilian ]. In France, it's very clear with -- Renault electricity will be focused all the BEVs in France.

Right. Next question might be the last one, from Belgium. When can we -- also from [ Dita Khawatir ], Auto News. "When can we expect solid-state batteries? Are they still at least 4 years away?"

We are developing all solid-state battery together with Nissan within Alliance. And we are partnering with academics -- worldwide academic start-ups and suppliers. We are expecting this technology to come to maturity around 2030. We are following 2 parts globally. One is a polymer-based, and the second one is ceramic-based. And the polymer one could come maybe earlier because some of the process is common with lithium-ion. So this is quite still open, but we are working hard on it.

Okay. So I'm waiting for the next question. If there's nothing more, then -- sorry. Yes, I think it has already been explained. But [ Professionary Sik Vehicle, Martin Cartier ]. "What about battery recycling?" And it will be the last one. So it's a good conclusion, by the way, of all the cycles.

It's the end of the life, yes. Battery recycling, we're quite advanced again, I think, in battery recycling. We started almost 10 years ago with Veolia, for which we have a partnership. And we're using their plant in Eastern France, in [ Aube ], if my memory is correct, since 2013 in order to recycle batteries. Previously, the process was more on batteries from phones and computers. So we have had -- or Veolia have had to adapt the process in order to recycle batteries for cars. So we have quite a lot of experience, but we are going to go even further. Today, we recycle around 60% of it through the method they have. But you've seen that we have signed another partnership, this time with Veolia and Solvay not long ago in order to go even further in the recycling rate and in the purity of the metal which is extracted so that we can reuse it so that it is at the good level to be reused in new batteries. And then you close the loop. Where you used to have the batteries, they have a life, they have a second life, you recycle them and you put them again in the new battery. So we're quite -- I think we're quite leaders on that stuff together with our partners.

Maybe it gives me also the chance to say that the whole thing about Mobilize Power Solution's [ refractory ], Renault environment is something that we build for the whole industry, not necessarily only for Renault business. So we might be able, if we are quick and strong and good, to actually become a good provider for other OEMs that need a very efficient process of reusing and recycling of the battery as the wave of second life and third life will come. One of the things that you have -- we have to also have clear in mind is that as -- because we started very early -- in fact, we are the first one to see battery coming back after 10 years. And this is a huge advantage of Renault because if you have introduced the cars in 2016, '17 in the market, you'll probably see the battery coming back in '26, '27, '28, '30. We are already getting the battery back. So we know the behavior. We have the data, but we also have the raw material to do exactly this. And this is a huge advantage.

Yes. And if I may add another point. Yes, indeed, you're right, Luca. First, we have the 250,000 batteries of ZOE, which we have leased, which are going to come back. So in terms of scale and then efficiency in the process, it's going to be huge. And you're talking about OEM, but not only. We have contacts with public transportation companies which are willing, for buses, for small vans, et cetera, et cetera, to bring it also together. So it's going to be a full ecosystem which we can use together with Renault, Veolia and Mobilize.

Right. It will be the [ the word ] of the end. Thank you very much, indeed, for throwing all the questions. Thanks to you all for joining us and attending the keynote and the Q&A session. And stay tuned because we'll see each other soon again for new novelties. Thank you, and see you soon. Bye-bye.

Thank you.

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