The French government’s €5 billion bailout of Renault got the green light from the European Commission on Wednesday (29 April), as the EU executive heralded the carmaker’s focus on electric vehicle development.
France’s finance minister, Bruno Le Maire, announced last week that the country’s biggest carmaker, Renault, would get €5bn after virus lockdown measures forced the company to suspend most production lines.
Yesterday, the Commission confirmed that the bailout is in line with new relaxed state aid rules. EU competition chief Margrethe Vestager said that “Renault is an important European car manufacturer, employing directly more than 73,000 workers in Europe.”
The Danish official added in a statement that the EU executive had worked closely with the French government in order to approve the aid as quickly as possible.
Renault, which has had to put more than 90% of its workforce on part-time hours and suspend dividend payouts to shareholders, will get a loan guarantee from Paris to prop up its dwindling cash reserves.
In its first quarter earnings report, published last week, the carmaker revealed that vehicle sales were down more than 25% and revenues had fallen 19%, compared with the same period in 2019.
According to a spokesperson, production will resume this week at its factory near Paris – where its lightweight Zoe electric car is built – and at some other sites in early May, after car plants were first closed in mid-March.
Vestager pointed out in her statement that “Renault is engaged in the research, development and production of the next generation of electric vehicles, the rollout of which is essential for meeting the EU’s climate goals.”
That expertise in building electric cars made Renault an attractive prospect for Fiat-Chrysler, which last year proposed a merger with the French carmaker. The Italo-American group, in urgent need of emission-cutting measures, offered lucrative access to the US market in return.
But Renault’s troubled alliance with Japan’s Nissan and the involvement of the French government, which owns a 15% stake in the firm, ultimately made an agreement untenable and Fiat-Chrysler courted the Peugeot group instead.
Europe’s electric car market is booming, despite the coronavirus impact on car sales, as EU regulations on curbing carbon dioxide tailpipe emissions forces automakers to clean up their act before an end-of-year deadline.
According to the International Council on Clean Transport (ICCT), plug-in sales shot up 10% in March this year, a record that analysts say is enough to put the industry on track to meet its 95g of CO2 benchmark.
Fiat-Chrysler’s so-called pooling alliance with Elon Musk’s Tesla makes it the most improved firm in Europe, after it recorded a 39% increase in registrations compared with 2019. Tesla’s involvement came with a multi-million euro price tag as part of a deal brokered last year.
Although Renault is lagging behind the EU average for March EV sales, the ICCT estimates that its efforts will eventually be enough for the marque to hit its fleet target by the end of the year.
Other players like Volkswagen lag behind but the German giant has pegged its emission-cutting ambitions to the ID:3, a compact, affordable EV due to launch later this summer.