June 16, 2024
Electric & Hybrid Cars

Sources report that discussions between VW and Renault to create a budget-friendly electric vehicle have come to a close.

Volkswagen has decided to end discussions with Renault regarding a collaboration to develop an affordable electric version of the Twingo subcompact car, sources familiar with the situation revealed. This development is a setback for both EU carmakers in their efforts to compete against Chinese rivals in the electric vehicle market.

As a result of the breakdown in negotiations, Volkswagen may need to proceed with developing its own affordable electric vehicle. Meanwhile, Renault will continue with its plans to introduce the electric Twingo in 2026.

Cost reduction was a key motivation for both companies in considering a partnership to develop the electric Twingo. However, Volkswagen decided to walk away from the talks primarily due to conflicting production strategies – Renault wanted to manufacture the car in one of its plants, while VW aims to maximize its European production network.

Ampere, Renault’s electric vehicle division overseeing the Twingo program, chose not to provide a comment on the matter. Similarly, Volkswagen declined to comment specifically on the discussions with Renault but mentioned that they are exploring options for affordable EVs.

After several months of negotiations, the companies were unable to reach an agreement. While they were close to a deal, Volkswagen ultimately decided to pursue its own electric car development.

Renault will proceed with the Twingo project independently but remains open to potential partnerships, including within the alliance with Nissan and Mitsubishi.

Renault CEO Luca de Meo’s vision of greater cooperation among European automakers to compete with Chinese rivals has taken a hit with the collapse of the VW-Renault partnership for the Twingo. This partnership could have been a significant step towards creating an “Airbus for autos” in Europe.

Chinese automakers, who are leading producers of electric vehicles globally, are increasingly penetrating the European market. This has put pressure on companies like Renault and Volkswagen to streamline operations, reduce costs, and accelerate product development timelines to stay competitive.

European automakers are targeting the production of smaller electric vehicles priced below 20,000 euros to better compete with Chinese brands such as BYD.

Reporting by Gilles Guillaume in Paris and Christina Amann in Berlin; Editing by Josephine Mason, Sharon Singleton and David Goodman

FAQ

1. Why did Volkswagen walk away from talks with Renault?

Volkswagen decided to end discussions with Renault primarily due to conflicting production strategies, as Renault wanted to build the car in one of its plants.

Conclusion

The breakdown in talks between Volkswagen and Renault for the development of an affordable electric Twingo is a setback for European automakers in their efforts to compete with Chinese rivals. Both companies will now proceed with their electric vehicle plans independently, with Renault open to potential partnerships within its alliance and Volkswagen exploring other options for affordable EVs.

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