French carmaker Renault (EPA:RENA) is reviewing its pricing policies of electric cars worldwide to ensure it stays competitive after a wave of price cuts by U.S. rival Tesla (NASDAQ:TSLA) Inc, a top executive said on Monday.
After slashing prices several times in the United States, Tesla on Friday cut prices in Europe- including on Renault’s home turf of France – as well as Israel and Singapore, expanding a global discount drive it began in China in January.
“We will analyse country by country, market by market, which level of competitiveness we need to have to stay in the game,” Fabrice Cambolive, the chief executive of the Renault brand, told reporters on Monday.
The brand’s sales rose 9% in the first quarter of the year, indicating a restructuring strategy focusing on the most profitable models may be starting to pay off after four years of declining revenues.
Cambolive said the rebound had extended into April, adding however that Tesla’s price cuts were a wake-up call for competitors.
He said sales of Renault’s Megane electrified model, one of its most popular, had risen sharply in March, with strong orders despite a very limited discounting policy. But the model now costs as much as its main Tesla competitor.
After last week’s price cut by Tesla, the Tesla Model 3 in France starts at 41,990 euros, compared with 42,000 euros for the Megane electric.
The Megane E sold 3,570 units in France in the first quarter, compared with 3,158 Tesla Model 3s, though the U.S. carmaker also sold 9,364 of its more upmarket SUV Model Y in the country.
“It’s clear that (Tesla cutting prices) is a challenge, starting with the cost side of things. It’s a warning that we are looking at,” Cambolive said.
Worldwide sales for the Renault brand reached 354,545 vehicles in the first three months of the year.
The whole group, which also produces Dacia and Alpine cars and will release group-wide sales data on Thursday, posted a 5.9% decline in sales in 2022, hit by the loss of the Russian market following the war in Ukraine. Sales for the Renault brand, which represents two-thirds of the group’s total, fell by 9.4% last year, their fourth consecutive annual decline.
The French company, which was hit harder than most rivals by the COVID-19 crisis and a global chip shortage, is betting on higher-margin cars to boost profits, and plans to spin off and list its electric vehicles (EV) unit on the market this year.
An early mover in the EV race which then struggled in the face of Tesla’s stellar growth, Renault ranked as the third EV brand for sales in Europe behind Tesla and Volkswagen (ETR:VOWG_p) last year. It was also third in the electrified segment, which includes hybrid vehicles, behind Toyota and Tesla.
In a sign on the pressure carmakers face on costs and margins, Tesla’s Shanghai factory workers took to social media to appeal to boss Elon Musk after being told at the weekend about plans to cut their performance bonuses, according to online posts and employees who spoke to Reuters.
