RENAULT

Company accelerates its electric car, but sees a long transition in Brazil

With EVs, the company focuses on consumers who prioritize technology and fleets, while also studying the production of hybrids in the country

Last week, Renault launched its fourth electric vehicle (EV) model on the Brazilian market since defining electrification as a strategy for the country, around five years ago. The arrival of the Megane e-tech demonstrates that the French automaker is advancing quickly in the segment, although it recognizes that the adoption of a 100% electric fleet will not come proportionally.

“It’s a transition that will happen and it will be long [in Brazil]. Europe, for example, began the migration to electric vehicles more than ten years ago and has until 2035 to stop selling combustion cars”, recalls Ricardo Yuji Gondo, president of Renault do Brasil, in an interview with IM Business.

In Brazil, the process should take longer, taking into account the strength of ethanol, a fuel seen as important in the energy transition due to its low carbon emissions. “We, at Renault, believe that by 2040, half of car sales in the world will still use thermal engines, already considering the adoption of hybrid vehicles [ethanol plus electric]”. Renault, remember, is working on a flex hybrid engine for the Brazilian market.

There is also a question of cost and scale. As an electric vehicle costs twice as much as one with a combustion engine, mainly due to the high cost of the electric battery, Renault has some bets in its electric sales strategy. One is in the public with greater purchasing power and who seek more technology, through the Megane, which hits the market from R$ 279.9 thousand (Brazilian currency).

“Our view in the group is that the price of electric vehicles will fall over the years. We understand that, at the end of the decade, cars with thermal engines will have higher prices in the face of tighter legislation against this product, making electric cars more affordable than those with combustion engines”, says Gondo.

On other fronts, the tactic targets the decarbonization of fleets, with Kangoo, and app drivers, with Kwid. To advance in this segment, Renault entered into a partnership with Localiza, which included 120 Kwid units in its fleet, which are basically rented by app drivers. “We have the technology, and Localiza knows the driver”, explains the executive.

In addition to the value of EVs, another obstacle is charging cars on the streets of Brazil. With around 3,000 electric chargers currently, by 2030, there will be a need for more than 70,000 charging points in the country to serve and provide coverage for the new electrified vehicles that will hit the tracks.

Today, Renault produces electric versions of the Megane, Kwid and Kangoo and has retired its first electrified vehicle, the Zoe. These are bets by the French automaker so as not to lose space to the Chinese GWM and BYD and, to a lesser extent, to the American Tesla.

Public policies...An obstacle to the scale of EVs in the lower income segments of the population, says Gondo, is the import of vehicles from these and other brands without paying taxes. Although the reasoning suggests a contradiction, Ricardo Yuji Gondo explains that the lack of an entry barrier takes away the competitiveness of industries that produce in Brazil, which ends up discouraging investment in technology.

“We need public policies to create an electric vehicle market in Brazil. One of them is to have an import tax. At the same time, there must be a transition period so that automakers investing in the country can have an exemption quota. This allows us to bring models that we don't manufacture here to see if there is consumer buy-in so that, one day, we can manufacture them in the country”, continues the executive.

The sector's expectation is that a regulation on the topic will be in the second phase of the Rota 2030 program, which should be announced in the coming weeks. “Renault is celebrating 25 years in Brazil this year. In the last three alone, we invested R$3.1 billion. Our product has a long cycle, we have to have medium and long-term predictability, otherwise we will not be able to validate these investments.”

Another concern on the radar involves automakers and tax reform. The proposal to renew tax incentives for industries located in the Northeast generated an impasse between large companies in the sector. This is because only one automaker, Stellantis (owner of Fiat), has a factory in the region and would continue to obtain a tax advantage over its competitors – Renault, for example, has its plant located in Paraná.

“This creates a distortion in the market. We are talking about billions of reais per year in benefit for an automaker. What we want is simple: equality. The automobile industry is a hyper-competitive market and we want equal conditions”, says Gondo. “For the logic of 20 years ago, to encourage the implementation of the industrial hub, it made sense. The incentive had already fulfilled its role and had a deadline. Life goes on."

Per: Mundoquatrorodas