Renault Pressures EU for 60% EV Local Content as Policy Delay Fuels Industry Uncertainty

Renault SA is advocating for increased local content requirements for electric vehicles in Europe, aligning with French government proposals according to Bloomberg. The company supports a shift to ensure that more components for EVs are produced within the EU. However, it warns that setting the threshold too high could hinder automakers' ability to meet the demand according to Bloomberg.

The European Union is currently reviewing its 2035 combustion-engine vehicle ban, with member states like Germany and Italy pushing to soften the policy according to Bloomberg. The review has intensified lobbying efforts, with conflicting proposals emerging from different nations. A decision was initially expected on December 10 but may be delayed as Brussels works on a relief package according to Bloomberg.

Electric vehicle battery production remains heavily concentrated outside Europe, according to Renault's Chief Strategy Officer Josep Maria Recasens. He argues that requiring 75% local content for EVs is unrealistic due to the high cost and global production of batteries. Instead, he suggests applying a 60% local-content rule across all vehicle types, including combustion models according to Recasens.

Industry Pressure and Policy Uncertainty

Six European Union nations, including Italy and Hungary, have called for greater flexibility in the EU's emission rules to avoid a de facto ban on combustion engines beyond 2035 according to TT News. They argue that the current trajectory risks industrial decline without a balanced approach to decarbonization. The letter emphasizes the importance of technological neutrality to support innovation and competitiveness according to TT News.

The automotive industry faces growing pressure as it navigates high energy and labor costs, Chinese competition, and U.S. trade tariffs according to TT News. Companies like Stellantis NV, Volkswagen AG, and Renault SA are closely watching the outcome of the policy review, as it will shape their investment strategies and future production plans according to TT News.

Strategic Moves and Market Realities

Renault also supports the establishment of a European commodity pool to secure essential materials like rare earths, which are vital for EV motors according to Bloomberg. The company highlights China's dominance in the supply of these materials, noting that European automakers are already seen as less capable of transforming their industries according to Bloomberg.

Meanwhile, lithium projects in Europe are being restructured to meet new content requirements for electric vehicles according to Discovery Alert. Companies like Imerys and Vulcan Energy are investing heavily in domestic lithium production, aiming to reduce reliance on global supply chains according to Discovery Alert. These projects are part of a broader effort to secure the EU's critical mineral needs, driven by the Critical Raw Materials Act according to Discovery Alert.

Outlook for EU Auto Policy and Investment

The European Commission may announce a package to support the auto industry as early as December 16, according to an industry source. This package could include a revised plan for the 2035 combustion engine phase-out and measures to ease industry burdens according to Reuters. The delay in the decision reflects the complexity of balancing environmental goals with industrial competitiveness according to Reuters.

Automakers and policymakers are navigating a delicate balance between reducing emissions and maintaining the competitiveness of European car manufacturers. With global markets evolving rapidly, clarity on EU policy will be critical for firms making multi-billion euro investment decisions according to Bloomberg.