Renault's Strategic Resilience: Why Leadership Continuity and EV Ambition Make It a Buy at €45

Renault's transformation into an electric vehicle (EV) leader and its deliberate institutional reforms are creating a compelling investment case. Amid a sector rife with leadership turmoil and execution risks, Renault's structured succession planning, Alliance restructuring, and aggressive EV pipeline position it as a rare value play with asymmetric upside. With a dividend yield of 5.7% and a stock price undervalued relative to its peers, investors can capitalize on institutional resilience and EU EV tailwinds—provided they monitor key Q3 2025 milestones.

Institutional Resilience: Mitigating Leadership Risks

Renault's transition from former CEO Luca de Meo to current CEO Thierry Bolloré has been marked by continuity, not chaos. Bolloré, a veteran of Renault's operations and former head of its design studio, has doubled down on the Renaulution strategy—a five-year plan launched in 2020 to streamline costs, boost profitability, and electrify its portfolio. This continuity is critical in an industry where leadership changes often disrupt execution.

The Alliance restructuring with Nissan and Mitsubishi has also stabilized its global footprint. While past disputes over governance plagued the partnership, Bolloré has repositioned the Alliance as a “strategic alliance, not a merger”, focusing collaboration on cost-sharing for EV platforms and autonomous driving. This pragmatic approach reduces geopolitical risks and frees capital for innovation.

Furthermore, Renault's employee share ownership program—granting 100,000 workers free shares and discounted purchase options—ensures alignment between management and labor. With employees now holding 5.6% of the company, the program acts as a retention tool and a buffer against union disputes, a common pitfall in European automakers.

EV Strategy: Riding EU Tailwinds

Renault's EV pipeline is its crown jewel. By 2025, the company aims to launch 10 new electric models, including a redesigned ZOE and a $25,000 compact SUV targeting mass-market buyers. This contrasts with competitors like Stellantis, which has delayed multiple EV launches.

The EU's Fit for 55 regulations, mandating a 55% emissions cut by 2030, are a tailwind. Renault's 2024-2026 investment plan allocates €14 billion to EVs and batteries, ensuring compliance while capturing market share. Crucially, its partnership with Northvolt for a €5 billion battery plant in Douai, France, secures supply chain control—a vulnerability for Tesla and others.

Valuation Arbitrage: A Stock Undervalued at €8.85, Targeting €45

Renault's stock trades at a 40% discount to peers like Stellantis and Peugeot on a price-to-book basis. Even after recent gains, its forward P/E of 6.2x reflects investor skepticism about its turnaround. Yet the 5.7% dividend yield—among the highest in the automotive sector—provides a cushion against downside risks.

The €45 buy recommendation (based on the €44.76 reference share price in its employee program) reflects a 300% upside from current levels. While skeptics cite weak near-term earnings, the stock's historical volatility (2.4% daily average) and oversold RSI (23) suggest a rebound is overdue.

Execution Milestones to Monitor (Q3 2025)

1. EV Launches: The compact SUV's pre-orders and production ramp-up will signal demand resilience.
2. Profitability Metrics: Q3 earnings should show margin improvements from cost cuts and higher EV ASPs.
3. Alliance Collaboration: Updates on joint R&D projects with Nissan could reduce investor concerns about governance.

Risks

• Supply Chain Disruptions: Battery shortages or semiconductor constraints could delay EV launches.
• EU Inflation: Higher interest rates might dampen consumer demand for premium EVs.
• Competitor Aggression: Tesla's Model 3 price cuts and VW's ID.3 expansion could eat into Renault's market share.

Conclusion: Buy Renault at €8.85 with a €45 Target

Renault's blend of institutional resilience, EV ambition, and undervalued stock creates a rare asymmetric opportunity. The dividend yield provides downside protection, while its execution on Q3 milestones and EU policy tailwinds could drive the stock toward its €45 reference price. Investors should accumulate now, using dips below €8.50 as entry points.

Disclaimer: This analysis is for informational purposes only. Always conduct your own research before making investment decisions.