Ford to use Renault tech, plants to battle cheap Chinese EVs in Europe

The Renault logo is pictured on a Renault Zoe car in Paris, Tuesday, Jan. 19, 2016. (AP Photo/Thibault Camus)

PARIS -- Renault will jointly develop small, cheaper electric vehicles for Ford for the European market and will also team up to produce commercial vans to cut costs and fend off rising competition from Chinese rivals, the companies said on Tuesday.

“We know we’re in a fight for our lives in our industry,” Ford CEO Jim Farley told reporters in Paris on Monday ahead of the announcement, when describing Ford’s response to the threat posed by cheaper Chinese competition. “There is no better example than here in Europe.”

Europe’s traditional automakers face an influx of Chinese rivals from BYD to Changan and Xpeng.

Filling a gap in the lineup

As part of the Ford-Renault partnership, the first of two planned small EVs - to be produced at a Renault plant in northern France - will reach European car showrooms in 2028. They will be smaller than any Ford plans for the U.S. market and fill a gap in the automaker’s lineup, Farley said.

The two automakers will also jointly develop Renault and Ford brand vans for Europe.

In a client note, Oddo-BHF analyst Michael Foundoukidis wrote that the deal allowed Renault to offset its fixed costs and generate revenue while offering “a capital-efficient route to market for affordable EVs” for Ford.

“More broadly, this partnership underscores the growing necessity for ‘pragmatic cooperation’,” between traditional automakers to counter lower-cost Chinese competition, he wrote.

A powerhouse for light commercial vehicles

“Together we can create a powerhouse of LCV in Europe that would be very difficult for the Chinese to compete with,” Farley said.

Although there are few Chinese brand vans on sale in Europe, Farley said the two companies “compete with them directly every day” in emerging markets.

“The Chinese will come soon and that’s why I don’t want to wait,” said Renault CEO Francois Provost.

The partnership was formed after a Renault team visited Ford’s Detroit headquarters in March. Both Farley and Provost said the two automakers do not plan to merge.

Ford’s share of the European passenger car market has almost halved in Europe from 6.1 per cent in 2019 to 3.3 per cent in the first 10 months of this year as it has pulled back from passenger vehicle sales. As part of a series of restructurings, the company has cut jobs and this year closed its Saarlouis plant in Germany.

Given the withdrawal of EV support from U.S. President Donald Trump’s administration, the No. 2 U.S. automaker faces the dual expense of investing in combustion-engine models and expensive new EV technology.

Using Renault’s EV platforms with Ford designs should help the U.S. automaker to compete in Europe’s electric car market against traditional automakers such as Volkswagen as well as the Chinese.

Ford already produces two EV models in Europe on a Volkswagen platform and makes vans with the German automaker. Ford CEO Farley said the Renault partnership will complement its existing one with Volkswagen.

The French automaker also develops vans with Nissan and Volvo Group.

Europe’s smallest mainstream automaker

Renault is Europe’s smallest mainstream automaker and does not sell vehicles in China or the United States - the world’s two biggest car markets - so the Ford partnership boosts its manufacturing scale to lower costs.

The French carmaker is actively seeking partnerships to make fuller use of its factories and reduce the burden of developing new EVs.

In 2026, Renault will produce two vehicles using platforms from China’s Geely in Brazil and is in talks with more automakers, including China’s Chery, to jointly produce and sell cars.

“Our ambition ... is to show that in Europe we can produce EV cars in Europe as competitively as anyone, including the Chinese,” Renault’s Provost said.

By Nick Carey and Gilles Guillaume

(Reporting by Nick Carey; Editing by Barbara Lewis)