Renault CEO: "What’s the point in refusing progress?”

De Meo especially wants his report’s readers to perceive the stark difference between strategy and regulation, and he believes legislators are far too heavy on the latter.

He says: “Today’s European regulators think all they have to do is set a target, let’s say to have us all sell 100% EVs by 2035. ‘Here’s the target,’ they say, ‘and if you don’t get there we’re going to fine you billions. Goodbye and good luck.’

“Strategy is very different. You agree a plan with the relevant experts. You raise money, distribute responsibility, decide timing and include a mechanism of correction, because common sense tells you complicated plans rarely last many years without alteration. You also need patience: some big issues need 10 years to build or fix, which is where public authorities should come in. Their job should be to back risk takers until we reach their targets. In China they do it just like this.” 

De Meo says his letter “went everywhere”, including into the heart of the G7 and the European Parliament. He’s had lots of calls on it both from automotive colleagues and unfamiliar contacts in industries outside, all of whom see a need for better industrial leadership. 

“There was a generally good reaction from colleagues,” de Meo says, “although some thought it probably could have come from ACEA [the manufacturers’ trade body de Meo chairs].” But in the end the Renault chief decided to make the letter more direct and personal, because officially agreed communications are inclined “to mix water with the wine”.

De Meo puts the current, much-discussed slowdown in EV sales growth partly down to lingering after-effects of the emissions scandal. “When there was a crisis in our sector, the legislators felt it necessary to change everything,” he explains. “It was widely accepted, but there wasn’t any kind of impact analysis.

“I said at the time, and the French government agreed, that the cut-off date of 2035 for a complete implementation of EVs was too early: it needed to be 2040. But when the authorities went for 2035 anyway, our job became finding a way to make that happen. They told us to take care of the gigafactories and they would handle charging infrastructure. But what happened on their side? Not enough.”

De Meo believes there’s now a serious risk of a strong pendulum swing away from EV sales, brought on by current difficulties with EV pricing and infrastructure. Some in the industry believe the current obligation to move fully to EVs by 2035 won’t now happen – and seem pleased with that. But de Meo sees taking pleasure in the slippage of an agreed timetable as “a big mistake”.

Slowing down means letting rivals invent necessary new technology, he argues. Innovation happens elsewhere. “What’s the point in refusing progress?” he asks. “No society in history that refused progress – and you can go back to Greek and Roman times to see this – ever scored an advantage.”

In any case, de Meo is convinced electric cars will be the dominant part of future road transportation. 

“Sure, we need to leave room for a portfolio of other new technologies,” he says, “but new EV powertrains bring intelligent architecture and better software with them. And different car designs. This is an entirely new generation of products, a much better experience. Besides, our research shows, cradle to grave, that in most cases EVs are conclusively easier on the environment.” 

That ‘in most cases’ is important: de Meo believes that’s why the Chinese, for all their dedication to EVs, reckon that when it matures, their car market will run at 60-65% EVs. The rest will be low-carbon models like PHEVs or range-extenders, because in some circumstances they’re better. The key lesson is that black and white solutions don’t work.

“In China, they reward the virtuous ones and punish the vicious ones,” he says. “We don’t do that. We punish everyone. Those that don’t comply are fined; those that do get no reward.”

De Meo has always been more sanguine than most about the Chinese automotive threat, pointing out that Europe dealt well enough with the Americans in the 1950s and 1960s, the Japanese from the 1970s to the 1990s and the Koreans more recently. European car sales from all three importing nations amount to about 25% today, and on that evidence he predicts Europe will survive the Chinese arrival as well.

The Renault chief recently studied the situation more closely, taking a nine-day tour of Chinese factories, driving cars and meeting some of the biggest players. He returned profoundly impressed and with the impression that in some areas the Renault Group could do more business with China, not less.

“If you are a keen car person and look into European car progress, you will soon see that from the 1930s on, there were many surprises in car design: lots of unusual designs and sparks of genius,” says de Meo. “Lately we have become more predictable, without much room for genius. Our cars are built mainly around reassuring the customers.

“In China, creative genius exists. Some cars are useless, but some are amazing. I met a guy whose company had just built his first car, a Porsche Taycan rival. He admitted he started the project with no passion for cars; he’d been making mobile phones. But he tested more than 70 cars to get his product right. I tried it and couldn’t find one mistake. He was getting ready to sell it for €35,000! What do you say to a guy like that? Do you tell him not to sell it? Of course not. I say well done, or ‘chapeau’ as the French say.”

De Meo avoids minimising Chinese achievements just because their system, and the government’s role, is different.

“It’s clear they have advantages,” he admits, “and they don’t have all the obligations we do. But I don’t want to talk about subsidies – that’s not my cup of tea. They have a system I’d describe as ‘administrative Darwinism’. The financial institutions and government take a financial risk, and businesses take the commercial risk. 

To participate, start-ups have to jump into a piranha pool with 20 others, and they all eat one another. Out of 20 players the authorities want five, and competition is brutal. Most won’t survive, but they make a lot of progress and use a lot of technology along the way.”

So what does de Meo see as the way to counter China’s expansion? Stop complaining and work harder seems to be the gist, but he’s too diplomatic to put it so baldly. The first move is obvious, he believes: Europeans must look at how the Chinese work, then roll up their sleeves and do the same.