- Renault has joined the electric car price war, attempting to reduce its production costs by 40% by 2027.
- The goal will be crucial for offering EVs at the same price as Chinese rivals such as MG and BYD.
- The news comes as both Tesla and Ford cut the price tag on their electric vehicles
Renault electric cars to get cheaper
Reuters have reported that Renault plans to cut production costs of its electric cars by 40% in just four years, in order to stay price competitive amongst its rivals.
Renault’s strategy is in contrast to Tesla, who have lowered the costs of their new EVs at the expense of profit margins in order to gain market share – and may lower the costs even further soon. The company already expects production costs to drop through this year, as the price of its raw materials is reportedly on the fall.
At the same time, the CEO of automotive giant Stellantis, Carlos Tavares, also said that western manufacturers will need to adopt similar strategies to Chinese car manufacturers. This could include outsourcing parts and production to countries with lower costs.
This goal will be crucial, particularly if the company wants to stay on track for its bargainous price goal of around £20,000 for the upcoming all-electric Renault 5, which would make it one of the cheapest electric cars you can buy.
Will the competition follow?
Tesla, Ford, and some of Stellantis’ models have already dropped in price. Meanwhile, an insider at Volkswagen expressed concern at the result of Tesla’s price drops in an interview with Germany’s Handelsblatt. Its sibling brand Audi announced plans to team up with Chinese manufacturer SAIC on electric vehicle development, but only for models sold within China.
With an increasing number of EV manufacturers willing to bring prices down, it’s likely that more and more companies will announce similar plans in order to stay price competitive. However, it’s easier said than done when considering the complexity of supply chains and material sourcing.
Cheaper electric cars without sacrificing quality or performance are crucial for mass adoption of electric cars, especially as those price drops will follow through to the even cheaper used EV market. This is particularly pertinent as bans on the sale of new petrol and diesel cars get closer across the globe.