Capital Market Day Ampere – Wednesday 15 November 2023, 2pm (CET) – Vélotype
Good afternoon good morning so thank you for being with us um of course today is a very important uh day for the Rena group and today’s objective just to be clear right from the beginning is to finally give you details about the aair project but uh let me let’s say first
Remind you in a few words I promise uh where we are coming from as a team so three years we have executed one of the fastest turnarounds in the recent history of the automotive industry we have done that one to three years ahead of our commitments and uh all of that as you
Know despite a very tough Market environment this was the resurrection phase of the rolu so this team is engaged it is effective it is fearless and I think it can be trusted also for the future at the same time we have uh prepared the I think the best product
Lineup this company had in decades it is focused on high growth and profitable segments and markets it is designed not only to address the core combustion engine market today but also and most importantly to be a leader in the mounting EV Market with two EV native platform and this was for us the
Renovation phase and it is working I promise you I would challenge in fact any analyst we have many here today to find someone even in China able to develop and launch 22 models with a 4 billion R&D and capex budget per year so there is no reason why the favor
Of able product life cycle that we will experience the next 3 to four years would not lift us to new heights in terms of financial but also in terms of market performance on top of that we were even able to unlock Jean Dominique will allow me this thing a slightly barck but certainly
Ineffective at least in the last years Alliance architecture with Nissan and Mitsubishi and now we can give it a new start creating value together and proving that chapter 2 is simply just a much better setup but the most important thing we did was in fact something else in my
Opinion it is the fact that uh 3 years ago we had the courage to see the crisis as an an opportunity to position a new group much ahead of the starting grid for the next Grand Prix making it one of the companies best adapted to the new
World Automotive used to be a single sport tomorrow it will be like Olympic games you have to learn to perform also on EV on Mobility Services on circular economy on top of being good of course at the additional disciplines and for 3 years for three years ladies and gentlemen we have been
Training we have been creating the conditions and building the bricks allowing us to perform on any relevant field for the future we’ have also been opening up to strategic Partnerships with the best in their respective sectors in this new world scale and synergies will remain of course a
Necessary condition but they won’t be sufficient anymore in a very volatile environment where technology is not mature and remains evolutionary those who stay light and agile putting their people in the position to experiment and innovate will come faster out of the Curve from an organization point of view we
Are moving from the classical OEM paramal structure to a more compact agile and Innovation oriented teams with the focus on what will matter for the future we are designing what we call internally the next gen automotive company ready to excel in each Sports to capture the incremental value across the
New profit pools emerging within and around our IND industry this is in fact what we announced last November this is Revolution the third phase of the reolution we push responsibility and accountability closer to the business and to the market we give autonomy and ensure transparency on the performance
We create focused entities like aair of course mobilize Alpine the Futures neutral we carved out ores whilst the traditional business we call power will mechanically grow thanks to the work we’ve done on product and on cost what is behind all of this is a fundamental reshuffle of our business model Rena
Group business today is 80% of mature segments if we do what we have in mind by 2030 50% of our Focus will be on activities with double digit structural growth and double digit profitability aair is one of course of the key building blocks of the group Revolution it’s how we are going to
Reinvent the Renault brand and position it at the forefronts of the new era of zero emission and softw defined Vehicles aair will design engineer produce and Market the EV cars of the Renault brand it’s there to ensure that Renault stays as a leader in a market that is quickly
Turning to EV and software as you know reaching double digit market share with double digit profitability has been our Obsession from the beginning for that we will be addressing the core segments in Europe with truly Innovative technology at the same time we will Leverage The Heritage and the assets of the Renault
Group so we combine the best of the world today I am tr to show you how this will enable Rena group to offer exciting and affordable products to our customers and focus on performance Improvement and value creation for all our stakeholders the unpair name is um tribute to a famous French
Scientist who 100 years ago invented the measure of electricity intensity we actually think it makes the point right ampair is truly unique it’s a separate entity intensively and Solly focused on event software designed to be a leader in Europe from day one aair is engineered as a grow
Story there is no place on Earth where the the EV Market Market is going to grow faster than here in Europe around 25% per year until 2030 policy makers have made that call customers are already uh making of battery power cars a mainstream choice we are Beyond we are convinced we
Are beyond the point of no return the 2 and 35 ice ban regulation has been set EV have reached a double in market share last year increased from 12% to 16% which is huge and for the very very first time more than more EV than ice models are to be launched by
Manufacturers in Europe it’s already a very strong sign for sure there might be a ups and downs but we think that will not be a coming back we are talking about a structural change something we have haven’t seen for decades leveraging the Renault brand andir is designed to address the core of
The European market the B and the C segment this is an estimated 75% of Market volume by 2030 and the Rena group is an Undisputed leader on the European market one out of 10 cars sold is Rena group car and it’s one out of six cars when you consider only the retail
Market AER is also a story of uh excellence in the new tech I would symbolically today start from software leveraging one of the most advanced automotive software suits aair is now creating a software defined vehicle competing with the best players the software defined vehicle is like a
Mobile phone uh on Wheels with the same same three onboard layers the hardware the operating system and the car Inc car services in fact it’s a game changer and I will explain you why the onboard solution is constantly connected to the cloud what we call the offboard layer it
Gathers all the the car data and interfaces to integrate application so far the current industry standard has been relying on a distributed architecture with dozen of controllers everywhere each dedicated to a single function like for example braking or air conditioning on the contrary the Bedrock of the sdv technology is a centralized electronic
Architecture connected to the cloud as I said with high calculation and connectivity capacities on top of it unbundled from the hardware you have a software platform that you’ll be able to constantly upgrade over the there during the entire life cycle of the car this is revolutionary because it makes the car
Able to learn all the time from its users and actually is getting better every single day we built uh the case for the soft to defined vehicle on very straightforward arguments first cost reduction one day five high performance computers in the sdv centralized electronic architecture
Will for sure cost less than the 80 you have today in the cars and we also estimated that upgradeability will save us 1.5 billion EUR of development cost over the next decade second an upgradable car will have a better residual value we put in the in the model you know something like
Five points but it could be actually higher third with STV it is the first time in the history of our industry that the car makers will have the opportunity to keep the vehicle in their service and after sale system basically forever this will bring at least okay at
Least again that’s what we’ve model 10 additional points of after sales retention but why not 100 the car is always connected all the potential incomes coming from fancy new service that that maybe no one has imagined today will only be for us the icing on the
Cake alongside with uh the EV shift the rise of uh the sdv uh technology in our opinion and actually even in my personal opinion is the next big thing in automotive and we think that aair has an advantage we think that the smartphone on Wheels is in reach for us because we
Have the people and we have the scale to deliver it thanks to also very unique partnership that we establish you may not know but software has been a priority of the Rena group for years now as a result today we have 1,800 top-notch internal software and system
Engineers they are not the last minute Patchwork of uh Engineers coming for a project and then leing uh you know with a yearly churn of 30% this is a real team yeah it’s a real team they have been working together for many many years they were the heart of the Intel
Europe for 20 years before before we bought them and we integrated them in 2017 and over the the last six years they also work together closely with Hardware Engineers so you know Automotive hardware and software as you know it’s kind of two different worlds two different langu languages but you
Need teams that can speak both and our software and car Engineers have had the time to find their common language learning to collaborate and combine the best of tech and Automotive today these people represent 50% of the total engineering work forces of ampair we have build that step by step so a
Pair was actually not forced to uh start from scratch and with the oper air link if you want a proof point we have already proved our technical capability in our cars it offers one of the best user experience and user interface on the market I’m not saying that this is you
Know the market and the magazines it’s available on mean Tech and it will be available of course in the cik tech we have developed that in house with Google demonstrating our ability to deliver outstanding software solution together with them so let’s take a look at It Two [Applause] so now in ampair it’s time to move uh one step further for all the functions of of the car through this sdv project we’re teaming up with the best Qualcomm Google Qualcomm is exploring the possibility of developing a digital chassis based on their latest and future
Snap bragon technology to be sold one day to other oems that’s why they have decided to be shareholder of aair so our success is their success even Beyond uh aair when it comes to Google actually they contemplate repeating in the car industry what they did in the mobile industry with the
Android mobile Coupe okay so 80% of the phones have Android system and with aair for the first very first time Google is moving beyond the cockpit potentially setting a dominant standard in the automotive industry and these are partnership that go much further than mere uh commercial relationships we are the first in the
Industry to go so open we strike the right balance neither doing everything by ourself nor delegating completely we develop in house and in the end we are the owners of the solution of the IP of the C data that are hosted uh in Europe so when you align and experience Hardware integrated
Like Renault the cheap specialist of the Android world that is qualcom and the Google cloud and and Android known for being the most adapted to also AI algorithms I I think that uh there’s less chance that you completely go wrong this is our opinion that was our think
In the beginning so let’s now watch what Qualcomm CEO Cristiano Cristiano and then a short video illustrating our cooperation hello Luca it’s an honor to be joining you in the inaugural unpair Capital Market day and be a part of your story of tech excellence and Innovation we share with unpair a deep
Understanding that the future of Automotive is the softwar defined vehicle powered by a scalable and upgradeable cloud-connected platform Vehicles will become dynamically configurable allowing consumers to access new functionality through over-the-air updates and OnDemand services this will extend the relationship automakers have with their customers beyond the time of purchase
And revenue opportunities will continue throughout the vehicle’s life cycle we’re thrilled to be working with unpair to make the software defined vehicle a reality unpair have unique in-house expertise our technology teams speak the same language and we have been working together successfully for a long time most recently we’re pleased at unpair
Saw value in our Snapdragon digital chassis our comprehensive set of cloud-connected Automotive platforms for tele Medics and connectivity digital cockpit and Driver assistance and and autonomy and embedded our digital cockpit and infotainment Solutions in the megun E Tech throughout our history of collaboration we have remained aligned
On the importance of a horizontal and open approach to accelerate the pace of innovation and deliver Next Generation experiences and now together with aair we look forward to developing a state-of-the-art softwar defined platform using snapdragon digital chassis Solutions unpair and qualan will both contribute their Technologies and resources to this long-term
Collaboration additionally qualcon intends to invest in aair I’m excited to see this vehicles in 2026 this collaboration would represent a significant opportunity not just for our two companies but a significant benefit for the entire ecosystem as it could be offered to other automakers including including unpair and its
Partners in qualcom and our OEM Partners thank you Luca for the opportunity to join you today and enjoy the rest of the Event I hav’t seen the video but you know Christiano looks like really like a tech Guru with this long uh beer so adopting a horizontal uh approach and open approach makes uh the sdv of vampair uh a truly unique uh feature it saves us time and money and I think it also
Reduces execution risk it will uh this approach and that kind of collaboration will reduce development Time by 50% this puts our development cost on the lower end of the budget amongst our peers on power the Chinese and up to two times cheaper than the Western OEM another benefit is that will be in
The market in 2026 quickly catching up with Tesla where Tesla will be at that time and being on par in time with the most advanced Chinese oems there is one key reason explaining the huge potential of developing an open sdv if you do your own system you might
Have few thousand Engineers capable of programming if you rely on a standard but close system then you might have some t thousands but if you do it on Android if you do it on Android then almost 6 million software Engineers around the world might come up with the ideas and
Code them directly in the system and that’s what we do the result is that we’ll benefit from the Overflow of application developed everywhere with no delay so we won’t be missing the next hit in the Google Store or the next ways uh release for instance
It will be right away in the unep cars and finally don’t underestimate the cultural aspects of software usage take what happened in the mobile phone sector it was not only a story of better access to semiconductor technology of cyber security it was also a culture story about functionalities economics and services in particular
Versus Chinese oems the the content of our sdv is based on the European customer needs and we know that Europeans for example will value more upgrade upgradability and connectivity that’s why also we are not investing massively in autonomous driving technology instead we’ll Target level two plus with an open option of level
Tree embedded if it comes we see actually the risk of being front runner in this field we also believe that the strive of old suppliers to level four and to level five will create functionality enhancing safety and comfort and this is where exactly we’re going to focus but at least we made
Clear Choices aair as I said at the beginning is there to democratize EV in Europe with cars that people can afford today on the core of the European market the average price of a nice uh vehicle is €30,000 against 45,000 for an EV our ambition is to
Close the gap reaching EV and Ice price parity before our competitors and this is why also we are doing aair of course affordability starts with reducing cost and uh we are not starting from scratch we already benefit from two worldclass EV native plat PLS the Amper small this
One for B segment cars and the Amper medium for C- segment cars not long ago going for an EV native platform was a bold choice that I think we made many competitors decided to sit on the fence with multi- energy platforms now it’s clear that we did the right move when
You see that 75% of the top 10 EV sales in Europe are based on fully native EV uh platform our two platforms are fit for purpose providing the right content for the right segment with absolutely no compromise and with these two platforms we developed a family program which makes each additional car more
Profitable having best-in-class EV platform I think is not enough and we are ready to go in fact much much further andair has a clear road map to progressively reduce vehicle cost by 40% between now and 2027 2028 on the same comparable product our true north to achieve this ambition is a holistic
Approach of the EV system with no taboos we question every single element from Battery E power train to platform upper body to manufacturing productivity to car efficiency sometimes car engineering has been cursed by silos specialist fighting in their own corridors to achieve their specific kpi at the
Expenses maybe of the cost uh efficiency of the whole system andaris organization is designed to break uh with that this cost reduction has already started and we see positive impacts on our upcoming uh launches and on the life cycles of our vehicles Tech optimization combined with volume and economi of scale are starting
To pay off just take the upcoming Rena 5 for its next Generation battery we reduce complexity from 12 to 40 to to four models for example and we’ll need over 20% less parts for the future Rena 5 compared to the mean all this will allow us to improve the price positioning of
Our cars it’s at the heart of aair strategy we want to reduce our cost to reduce our prices the faster we decrease our cost the faster we we will decrease our prices the more we will increase our margins for example we revealed cic in September will start at around 40,000
Euro which is significantly below uh compar such as model Tesla Model y or the byd auto3 and the VW id4 then by 2027 2028 mean and cini successor will deliver the final blow reaching price parity with the ice vehicle on the B segment side things will move even faster in
2024 aair will disrupt the EV market with the price of the iconic Rena 5 starting at €25,000 matching what many European customers are paying for hybrid cars today and pure player competitors are lagging behind they have so far zero of very limited offer in the B segment in
Europe Our intention is for sure to keep our positioning thanks to an exciting and competitive product portfolio six cars capitalizing on what we have been always good being good at doing to Embark our clients on the EV and software journey I remind you that we have sold more than 650,000 EVS at the
Group level so far we were the number one in Europe for many many years our upcoming EV lineup show shows clear differentiators and we focus on what matters more for the European customer this is price already told you range design and connectivity now allow me a few few
Minutes to present you the product portfolio with the mean I think we didn’t start with the easiest car yes it’s an outstanding product showcasing our EV and softw Technology it shows what aair can deliver on software but it’s a hot hatch position on a niche segment not through a family car uh due
To its compact size and package and most important still expensive despite that mean is doing more than 2% of the EV Market uh in Europe and it’s a conquest car for us in fact over 50% in Europe and 60% in France are new customer to Renault and it makes also people come
Back to the Renault brand so it’s a kind of a reconquest machine with a rate of around 40% so Megan is Paving the way for future success within same platform same family cic the blue one is more on the core demands we developed the the product with two ideas in mind first was
About offering to the mainstream European families and all around the EV able to become the first car in the household revamping the idea of the V cic has the right content including software it has best-in class range up to over 625 kilomet you can for example travel from Paris to Amsterdam without
Recharging cynic total cost of ownership is already at par with hybrid cars of the same category it’s competitive with an entry price of 40,000 and it offers the best ratio exterior Dimension interior riness in line with the cic original DNA we also wanted this car to
And this is second idea to be the materialization of our ESG in Flesh and Bones I should say in metal and plastic it is a car born with a purpose 95% of its materials including the batter are recyclable up to 24% of the vehicle uh materials are already built with
Recycled materials these kind of things increasingly matter especially for Fleet customer no other car on the market combines such a lightweight with so many feature and so much range less than two tons for more than 600 kilomet and for the first time cic features a package of technologies that we call the safety
Coach potentially avoiding 70% of accident causes in real usage it was revealed a few weeks ago and it will be eitting the showrooms by the beginning of next year our idea is in the in the first product cycle is also to revive a series of legendary names uh that made the
Success and reputation of this company we are going to reinvent them thanks to the latest hardware and software techno this is a chance to immediately reconnect with people good memories provoking a sort of an emotional shortcut accompanying them into the future take Rena 5 and Rena 4 when you
Have sold almost 40 million units of those two cars of the of the over the last six decades you have the possibility to easily awake people’s emotion and memories these two products will not only be magic for the look and Heritage but also for their performance
And finally Rena 5 and Renault 4 show our Renault leverages software and chips to transform cars into intelligent and learning connected products humanizing technology is our Credo ATO we will Pro it like nobody else in the market and we will be starting from our uh let’s say most popular and accessible products so
Let’s be clear here Rena 5 is the car that everybody wants because it’s a legend that inspires all generation and everyone is looking forward to it the reaction of the media and social media is a perfect proof of the potential of the thing Rena 5 has already generated
Around 80 million euro in PR value since the launch the beginning in 20121 on top of design able to project this I into the future Rena 5 will offer up to 400 kilm range and on the tech side it will feature our Avatar new Avatar that we
Call Reno that is packed with the AI to make the user life easier easier and I will tell you about in a few minutes the final car will be revealed in February at the Jia Motor Show I already of course test drove it and I can’t wait to open our
Pre-orders so when it comes to the Rena 4 as is its ancestor it’s going to be a car with top versatility it is an icon fit for all usage the reinterpretation of a universal car but for the electric ER and we cap capitalize on the winning
Ingredients of the Rena 5 such as the aair small platform and the infotainment with Rena 5 and Rena 4 we create what I like to call instant Classics it is a very powerful strategy and I personally know it by experience just those four name plates I mentioned
Before have already been sold over 30 million times in the last 60 years now let me show you a quick movie so can we can virtually Recap So so I told you about aair projecting Rena cars into the future but aair is a concept it’s even more compelling than that aair is designed to be a technological manufacturing and business platform serving also other brands than Renault aair will provide software solution for the entire Renault group
The flexibility of the manufacturing lines the modularity of the two platform and the competitiveness of the operation have already convinced Alpine to build two models on the same lines aare will also support data electrification and Nissan has joined the club to produce its Micra on top of that I can confirm
That Mitsubishi will produce a c SUV EV for the world on the ampare medium platform of course in Du and of course all electric and this is in our opinion only the beginning I don’t want to leave you without mentioning another Ace that we have in our pocket in fact this is not
Just an additional product it’s a real and clever solution for many of the sometimes I have to say conflicting demands coming to the industry from different stakeholders from customers to public authorities I am announcing the future twingo this is a new Silver Bullet for sustainable mobility in urban environment thanks to its best-in-class
Efficiency and fit for purpose but battery twingo will consume far less materials 50% less compared to an average csuv this is our response to decarbonization air quality issues Electric Mobility affordability the reindustrialization of Europe the creation of a European supply chain and all of that in one product ladies and gentlemen the future
Twingo Oh Everybody loves this car at Rena it comes from the guts this will be a game changer once again like uh it was 30 years ago this is a fit forp purpose Urban vehicle state of the RTV with no compromise we target best-in-class efficiency with only 10 kilowatt the 100
Kilomet over its entire life cycle the future tingle will emit 75% less CO2 than the average car sold in Europe in 2023 and of course with zero zero tpipe CO2 emissions I it will also occupy 20% less space than the average European car and it will be truly affordable with a price
Tag below 20,000 without subsidies less than 100 EUR a month for our clients and don’t ask if we can do it we have already done it with the Dua spring but this time it will be done in Europe and we will develop it noil in the record time of two years from
Concept freeze to start of production matching the speed of the Chinese oems right this is a strong clever inclusive counter proposal of the European industry to the challenges of sustain aable Mobility we are confident that in its potential to be a real game changer because we know we have a great track
Record with this kind of projects and last but not least we have ongoing discussions with OEM Partners to share the development cost I say that aair is about democratizing EV for that it also goes beyond the product in fact the first wave of buyers the early adopted early adopt
Adopters has in fact passed now comes the second wave people with other expectation to move to EV they actually need trust and they need the piece of mind that’s what we see in the research aair unlike pure players or newcomers owns all the ingredients to offer that
From day one we don’t need to invest massively n either in in time or in cash and this makes a big big difference with the poor players first the brand aair benefits from Renault 98% brand brand awareness in Europe everyone knows us here this creates trust because people know where
They set the foot and it puts us at least half of the time on the shopping list the main customers also want to buy and I want to underline that want to buy in dealership 70% of them according to our research want uh to do that against only 30% amongst the early adopters
That’s where the Renault group uh Network in Europe takes a stage with its 4,700 dealership and 8,000 service points we have 30,00 th000 EV trained people ready to support our clients this is some something that no fancy website can replace and of course it will also
Be possible to find to find to to book and to buy your car uh online people also need to be reassured after getting their car for that to impair benefits from the assets proximity and experience of Ren group to sales and it’s Network so we have a very strong today a very
Strong customer satisfaction it’s already recognized with an E reputation score of 4.8 stars in the Google star rating in Europe we are doing actually better than competition customers also expect to get access to charging points whenever they need at the best price with Green Solutions and they want to charge and
Home and control their electricity bill for that too aair it and its partner offer a full range of solutions with mobilized Beyond Automotive we already have an all- in one wallbox solution allowing to peacefully charge at home at the office we also optimize people bills thanks to mobilize smart charge it
Chooses the right moment of the day or of the night to charge the car from 2024 onward aair cars that means from the Rena 5 aair cars will be equipped with the vehicle to grid technology it allows us them to re inject as you know the electricity stored in the battery into
The grid when it’s appropriate um empowering our custom to reduce uh electricity bill up to 50% for example in France and this is our ambition for charging away from home mobilize charge pass is already giving access to more than 500,000 charging points in Europe and we go further soon locating around 200 fast
Charging stations within 5 minutes drive from Highway exits so when it comes to addressing new ways of owning a car aair is uniquely also their uniquely position thanks to our investment grade captive Finance arm this is more mized Financial Services it is recognized as one of the best in the
Industry it offers Solutions ranging from simple subscription for a few days to full leasing for years this is a very powerful asset that allows us to reach 82% of financing penetration rate for mean on the retail sales this is 22 points above ice and hybrid vehicles finally I’m aair is equipped to
Maximize the life cycle value of its cars until now the vast majority of our revenues were were generated when selling the car uh all the associated let’s say products like Finance maintenance and insurance our new business approach breaks with that we are going to continuously increase the share of the revenues generated after
The first sales of the car there are many revenue streams that aair could capture on top of what we sell today so let me sum it up quickly find a solution over the life cycle of the car charging Services connected Services unlike some competitors we are not over promising
Those additional revenues and profits are mainly an upside to our business model as T will explain later now I would like to explain to you uh how aair operating model has been tailor made to compete in what we recognize as being a completely new uh sport or discipline
With rules of the game that are different from the I 70% of the cost of the materials in an electric car are linked to EV components you need two times more semiconductors than in an ice cars the raw materials are different the number of Parts is at
Least 30% lower than in an ice car vast majority of the new functionality ities of the product will come from software and finally n will require less less maintenance than an ice and on the other hand new business opportunities are emerging from connected cars and energy ecosystem we are talking about a
Completely different value chain and also a different business model so hitting World Records in this new sports requires different talents different training and a different measurement of the the performance we designed from scratch a completely new organization entirely focused on EV and sof without compromise aair is about 11,000 people out of the
106,000 working in the group from day one this team will uh focus on activities serving its purpose and only in the high value adding activities aair will have 35% of engineers in its uh workforces and half of them will be specialized in software this is about twice the proportion of engineer that
You can find normally in the Auto industry I would say on average this makes us more similar to a tech company than to a classical OEM as a tech organization software engineering is separated from Hardware engineering this will enable the decoupling of software and Hardware uh I would say development
Cycles this team and has the power to deliver while operating with the same agility and speed as the PO players or startups with the flat and efficient structure the ambition was to get two management layers less compared to Rena group increasing the accountability and the speed 95% of the employees will be in
Operation so with very lean support functions with 25 billion of turnover by 2031 for a pair each employee will generate around 2.5 uh million of business this is five times more than today at Rena and three times more than the leading pure EV Benchmark that we know
Today this unare team will be will keep I would say inclusion and diversity as a key value aair is playing for a fair Automotive transition making sure that 100% % of the workforces is upskilled and reskilled from day one thanks to the now famous Rena University it’s one of
The biggest reskilling projects in Europe on topics like batteries data cyber security and CC economy aair also as Outreach programs for talents from underprivileged uh backgrounds we have an agreement to hire I think 300 300 minimum uh income beneficiaries in uh in 2023 and 2024 and we will continue to push gender
Diversity and equality so for example we will reduce gender pay Gap uh to Zero from day one just to make a few simple examples so the unare leadership team will gather this very important people We Gather outstanding talents from both Ren no group and Global Tech Champions uh or International Automotive companies
Our team will be given full autonomy and they will be fully accountable for aair I think that is a quick video Presentation Thank you um thank you for them thank you for the Applause for the team so the aair organization is also the place where we establish a modern technology and datadriven governance model we’re talking about core it platforms encompassing all all key corporate process and dimensions from product development with the so system 3D
Experience to Industry with the digital twin that we develop together with Google to the endtoend supply chain systems with the unique set of technology that we developed leveraging Google Cloud technology to sales and after sales we take on to finance with the development of the new sap for Anna
System this is going to break silos homogenize data Foster transparency speed and collaboration and we will not stop here aair is an AI native organization we have a dedicated AI team at the first level of the management it’s led by a worldwide pretty famous uh expert luk Julia in the last years we
Have come up with a breakthrough in uh what is actually the Bedrock of any AI application this is data and today we collect over a billion data every day from all industrial sites and operations everybody speaks about AI as a buzzword but let me give you a few true uh
Example things that are happening at Renault on Logistics we have developed tools to efficiently fill our trucks it enables us to use 8,000 Less trucks avoiding 21,000 tons of CO2 and we also have tools to optimize the roots of the truck drivers we are innovating on the production uh side for example
Predictive maintenance brings a critical support to the competitiveness of our plant and on vehicle distribution predictive AI is a game Cher when it comes to deliver data uh reliability it brings improvements in terms of customer relationship Management in terms of customer satisfaction and Supply management finally you will soon witness
The artificial intelligence in our cars with Reno the Renault avatar from the launch of the Rena 5 this is the Incarnation of what you call humanized technology Reno will evolve over time customized for every situation we are creating uh in fact you know more than aair the leading EV and software uh
Automotive ecosystem beyond the Ampere perimeter ampere of course it’s a fully fledged OEM operating at scale but it’s is also a catalyst for the entire EV industry let’s now talk about how this galaxy works first of all it includes different elements of the EV value chain from raw material sourcing to assembly
And pairs unique ecosystem approach is designed to cover all of it very efficiently focus on what matters partnering with the most relevant players allows us to optimize our investment smartly allocating capital acquire data competences drisk our approach and get the Strategic agility that is needed when you are in a very volatile technological
Environment this approach from what you see from the numbers actually pays off already aair uh benefits from one of the most complete EV value chain coverage in the industry and we invested nothing compared with the tenth of billion spent by by competitors who build for example their own Giga factories for raw
Materials we are securing sourcing that through direct purchasing and we also buy directly from our long-term battery supplier we have already secured a significant part of our key commodity needs from four Partners from manm to Cobalt to terap fame on nickel and vcan and more recently AR on lithium for the
Batteries we chose not to invest billions as I said before directly in J factories we rely on best-in-class and diversified partnership from Big Corporation to Startup so we have over 15 years of commercial partnership with LG this is something we’re very proud of and uh we too are I think very special
For them because it’s with us and with General Motors that LG entered the automotive sector so reinforcing this Cooper cooperation will ensure us stable and competitive battery sourcing we have also chosen two additional main strategic Partners whose battery F factories will be uh in France next door
To our assembly lines you have first Envision as this is a global part player in Battery Technology and factories building its own gigafactory in Du it will have a capacity of 9 gigas in 24 and we aim at reaching 24 gigas in 2030 and there the objective is to produce
State of the of the art low carbon cost competitive batteries for the Rena 5 we also uh and the Rena four we also partner with verco this is a French startup specializing in battery cell development we have acquired an initial stake of 20% in 2021 and we have just
Taken part in successful C Series contributing to a 2 billion fundraising so v c f future Giga Factory is in D not far away will supply uh the equivalent of 12 gigas of batteries per year to power the higher segment vehicles of the Rena group Brands and last but not least
Uh aair as a joint venture in rits this is our plant uh with Min allowing us to develop and produce our battery casing in electricity the E power train is another key link of the EV value chain with tie uh uh up let’s say with complementary Partners such as for example valo with
Wot with vitesco with st micro Electronics to deliver an ultra efficient uh E power train developed at 70% in house and it will be in the market in 2027 we went for the so-called electrically excited synchronous modor technology not only because of its efficiency but also because it offers
Independence from rare heart uh Supply so Renault has been pioneering this technology uh and this technology has Rec recently been embraced by the likes of great Brands like BMW so the center of the Amper Galaxy is its manufacturing heart that’s electricity it includes four production sites two assembly plants uh D and MERS
They produce our aair lineup and several models for other brands Alpine Nissan Mitsubishi du is already a full e plant and mour will be converted to full EV plant by at the maximum the end of this decade the ru plant will produce the battery casing and finally we are
Converting Cleon into one of the biggest and most competitive European e-motor production sites all these Investments are already running or ready to go we are are already one of the European major EV production polls with a capacity of 400,000 units ramping up to 620,000 within 3 years without further
Investment and we have a road map allowing onair to reach 1 million Vehicles by 2031 we are shooting for our ecosystem to be as competitive as Eastern urum plants by 2025 at least we will ass a car in less than 10 hours for Renault 5 it will be 9 hours below a
Worldwide where very well-known leader an aair benefits from an ideal logistic ecosystem as of today 75% of our suppliers are less than 300 kilomet away from the plant it reduces logistic costs by 40% and within a radius of 1,000 kilomet we have roughly 75% of the European EV market with the customers
Electricity carbon footprint will be Net Zero by 2025 first by 2026 we will reduce our energy consumption by 40% to achieve that we have compacted our plans reducing energy needs and we optimize Energy Management thanks to 4.0 manufacturing system and digital tools I mentioned before on top of consumption
Reductions we go for fully sustainable energy aair benefits from a good starting point with the I would say the France electricity carbon footprint being among the lowest in the World Behind only Norway and Sweden and we move further we will cover Al our electricity needs through renewable energy thanks to the largest green
Supply contract in France with voltalia using solar panels when it comes to the heat we will re partnersh for low carbon Supply including biog gas by 2025 electricity will have reduced by 90% 90 its CO2 uh emissions the Amper Galaxy is also about our panel of suppliers we streamline
Reducing the number of supplier by around 40% from 400 for the mean to 250 for the Next Generation CV for example in the traditional world we relied on a classic customer to to to supply relationship now at aair we will engage in long-term and more strategic relationship we seek cooperation to
Co-invest to co-develop and of course also to share the risk we also make sure this ecosystem complies with the best of the standards in terms of Human Rights transparency and hects aair is in full control for making its panel ESG collection criteria are mandatory for its suppliers andair
Partners with the best auditing and mitigating uh actors only in addition it will have a transparent and traceable value chain from mine to sell by 2025 unpair supply chain is responsible and sustainable by Design so being part of a planetary system also makes aair more resilient and robust because it can leverage all
The assets and initiatives of the Rena group for example there mobilize which I already touched upon for leasing subscription payments Insurance charging solution but second live offering but also the future is neutral is important is another example this is the Rena Group Company dedicated to Circular economy that is
Actually taking off right now aair will benefit from the activities of neutral and its Partners on Clos Loop recycling for battery and e-motors production scrap and for end of life uh Vehicles neutral also gives a head start to ampair to anticipate circular economy regulations the B directive will impose
Fixed percentages of recycled minerals within batteries by 2031 and we are ready neutral uh mobilized and ren group of sales give also a head start to ampare when it comes to battery full life cycle management for battery repairability we have a network of 20 battery repair centers and an overall
Capacity with 8,000 batteries per year in Europe for battery Second Life repurposing we have at the track record of mobilized and for battery recycling we have 12 years of experience and a set up to uh let’s say 100% traceable responsible and eco-friendly sourcing of recycled Cobalt nickel lithium at the
Very competitive price all these business streams have not been factored in The Proposal that the will describe later I want to be very clear so how much money and how much time would be necessary to activate all of this for a new Commerce billions years decades I guess but unair has it
And right now if you put it all together uh you see that being part of uh that Galaxy gives aair a strong Advantage compared to any newcomer in time and in money building Rena Brands 90% awareness from scratch according to our estimation would require at least 5 billion Euro in communication investment
Setting up a network with the same capillarity as that R Group has will probably require 3 billion Euro and to have the procurement and investment that we already in Cur you probably need another 7 billion Euro so we’re talking about 15 billion and many years of ramp
Up this is a very nice gift for a a newborn and as you can see aair is a project with a lot of substance and the beauty of the thing is that we know how to make that all work together this is what T is going to tell you right now T
My dear CFO the floor is Yours well thanks very much Luca and uh good afternoon to all of you um to illustrate everything that we’ve talked about so far in a in a very simple fashion let me walk you through the typical life cycle uh of a vehicle to show you how the aair and Runner group
Operating models going to work first of all aare is going to plan and decide its vehicle lineup including the design it’s in charge of developing all the Bev and software related components for the development of nonb specific components for example a seat or a mirror aair will use Solutions
Across Runo group with the help of Reno group uh with its scale and its purchasing power pair sources the materials it then produces the the vehicles in Cleo and in the electricity plants that LC had just described once the vehicle’s been produced aare benefits from the extensive retail network of Reno group
For sales and distribution during their afterlife uh during their actual life cycle all pairs vehicles are serviced by Reno’s after sales network while mobilized offers financing options and seamless charging experience to aare customers at the end of the life of the vehicle the futur is neutral steps in
For battery and raw material repurposing as well as vehicle refurbishment as you can see these are focused and symbiotic relationships organized to attain the best for both sides but may no make no mistake aare is in control of its cost more than 90% of the vehicle costs are decided and incurred directly by
Aair from its external suppliers or in the shape of labor cost we’re talking about a complementary operational model that translates into mutual flows over a broad scope of functions and activities so it’s a lot of relationships to secure these relationships contracts have been negotiated between Rog group and aair respector respecting clear guiding
Principles number one ensuring business continuity number two setting up the aair and Reno group relationships on an arms length basis with clear accountability and autonomy principles at heart number three encouraging both parties is to strive for competitiveness thanks to clear performance metrics and objectives and flexible simple contractual structures number four defining clear
Governance and escalation processes to solve any potential conflicts of interests to be very specific these relationships have been clearly defined in 20 contracts grouped in four broad categories product and Supply agreements specific Services agreements to cover R&D developments for example sales and marketing agreements and general Services Services agreements that cover
Things like isit and like Finance Etc over the last months each one of these contracts has been subject to a strong negotiation and validation process involving opair and Runner group representatives to ensure that both party interests are fully respected the overall process was facilitated by an external party overall we’ve organized
Our relationships in a clear and efficient way to make this operating model work from day one Switching gears a little bit let’s talk about ESG again ESG forare is more than an aspiration it’s there by Design it’s in embedded in everything that aare does in the past minutes Luca has in many
Occasions touched on some of the aspects of the SG strategy so I’m just going to try to wrap it up for you and give you a bird’s eye view a ESG purpose is very clear and it rests on three pillars first we expand the decarbonization Beyond electrification
To be a net zero Company by 2035 second we work to preserve natural resources putting the circular economy at the heart of our business model we Implement Clos Loop recycling of key materials and are uniquely committed to four battery life cycle management last but not least as mentioned by Luca oper positions itself
As a leader of the fair Automotive transition our supply chain abides by the highest standards in terms of human rights and transparency and ours is an ethical and inclusive workplace let’s focus for a minute on the first pillar and see how Ware as a whole will become a net zero Company by
2035 we’ll achieve our Ambitions by deploying our decarbonization efforts following a crador to grave approach first opair obviously benefits from its full EV lineup with zero tailpipe emissions second as mentioned we will be Net Zero on the industrial scope by 2025 thirdly we’ll also benefit from the decarbonization of the electricity used
For vehicle charging when it comes to opel’s suppliers carbon footprint thanks to our European Centric supply chain we have a great starting point altogether sourcing and assembling an opare car emits up to 40% less CO2 than our Pure player competitors and we’re going to go further we’ll reduce our vehicle supply
Chain carbon Forint by 30% per kilo of materials purchased in 2030 versus 2019 by focusing on the six most contributive materials such as aluminum steel and polymers beyond the car the battery Remains the biggest decarbonization challenge for an EV will’ll decarbonize our batteries by 35% in 30 versus
2019 thanks to two levers on one hand the decarbonization of the energy required for battery production with our two Giga factories in France on the other hand low carbon raw materials sourcing through our Partnerships with the mineral suppliers that we already mentioned all this and more will lead us
To reduce our 2019 Baseline by 90% in 2035 reaching our objective of being a net zero company with single digigit compensation I told you that aare is an ESG native story but we’re not the only ones to be convinced of that one of the most recognized rating agencies sustainalytics performed an ESG rating
Of aare and they came up with the same conclusion we rated number one in the auto in the automotive industry with a score of 12.8 more than four points better than our closest peers including pure EV players and even outside of the automotive industry were in the top were
A top ESG performer globally we’re placed in the sixth percentile of all the industrial companies assessed by sustainalytics this unique es ESG DNA will be nurtured by a transparent and reliable governance ‘s governance will be ensured by a dedicated board of directors it will meet the highest standards of
Independence with at least a third of independent directors in application of the affet medf code appointed for their expertise in Tech in automotive and in business the board will include three dedicated committees that will support onair in the three fields that are key for its success strategy and sustainability audit and risk and
Nominations and compensation On’s board will be lean with 11 members including the chairman to ensure the speed of decision and Agility required to meet its business model the board will include six R Group directors including Lucas the chairman four independent directors and one Nissan director from the onset it will display Benchmark diversity
Metrics making onair success uccessful also means giving it the level of Independence that it needs I want to be clear aair is not just a business unit of Reno group it’s a 100% Corporation in its own it’s in its own right fully focused on performance you’ll have the
Full visibility on this performance with all the level of transparency required for a listed company and I’ll come back to that the autonomy required will translate into specific independent decision making processes in opair following standard delegation of authority levels in all key areas that are critical for ‘s performance and
Development it’s now time to see how onair materializes in numbers so what does this all mean financially what we’re doing is building a pure EV player that’s designed design from day one to deliver an industry Benchmark level of financial performance with the reliability of an established OEM It’s
The Best of Both Worlds onair targets 10% operating profit from 2030 and onwards with a clear Milestone to reach its Break Even Point profit and Cashwise not in a decade but in 2025 2 years from now let’s have a look at the path to the 2025 figures as a first step volume will
Be the main driver as we go from one model in 2023 to four while improving price competitiveness in parallel we’ll keep improving distribution costs thanks to our upcoming lineup as sique Rena 5 and Rena 4 will require less incentive that means already low based today we’ll also
See the early impacts of our efforts on Cog reduction but more to that more to come on that later finally 2025 will be a step year in terms of severity of Cafe requirements this will give more value to the cafe credits generated by by onare for the rest of the runal
Group from our break even point in 2025 we have a clear path to to reach double digit operating margin by 2030 the dynamic is the same but the importance of each lever is different will rely Less on volume and a greater portion of the profit increase will be
Achieved thanks to our vehicle cost Reduction Program let’s have a look at each brick in our profitability Bridge first of all opare is a reliable growth story a promising lineup of seven Vehicles will enable to Target 1 million units in 2031 focused on the fastest growing EV
Markets in the world aair will deliver a first generation lineup consisting of four cars mean SII and the iconic Rena 5 and Rena 4 by 2025 in 2026 twinkle will arrive then aair will enlarge its lineup to reach reach a level of seven seven Vehicles as mentioned earlier Renault 5 Renault 4
Twingo by then The Replacements of mean and of SII and two additional Vehicles also don’t forget that op will benefit from one of the largest existing customer bases in Europe there are today over 30 million Renault cars on the road in Europe today and this is compounded
By a a strong loyalty rate of around 60% this creates a huge natural pool of future customers for aare translated into revenues our first generation lineup of four vehicles will be the main driver to reach 10 billion EUR by 2025 in revenues vehicle sales will account for 75% of ‘s Revenue in
2025 and 9 % of of Revenue in 2031 in addition to its core lineup opair Revenue will include sales to Partners these will come from the development of manufacturing the development and manufacturing of complete EV vehicles for Nissan for Alpine and soon for Mitsubishi EV and software technology so
To run a group and potentially external partners and for a limited amount of time Legacy ice components and services as in the short term this will help us avoid overc capacity in our plans sales to Partners represents almost 50% of Vampire’s Revenue in 2023 they represent
A fifth of the revenue in 25 and we’ve embedded in our business case 5% by the end of the decade we’ve been pretty conservative we have only included in the fur the the Partnerships that are already signed but we have a strong opportunity to grow the sales of
Software and EV components as well as full vehicle supplies into a significant business in the future opair will also develop its after sales business leveraging the network of Rog group and capitalizing on the connected cars as mentioned earlier after sales revenue will be margin at the beginning but will increase to
Hundreds of Millions with the surge of the number of op cars on the road we consider what we call new Services as the cherry on the cake or the icing on the cake as as Luca said this means that we’re not bet betting on thousands of Euros of additional
Revenues per car like some of our competitors have in fact we estimate we can gradually grow them to 5 00 per year per car in operation this will consist in apps connectivity and charging and Energy Services for example of this amount 60% will go directly to aare while the
Remaining share will be recorded in the other entities of Reno group involved in these services such as mobilize finally as it produces most of the EVS of Rena group opair will generate corporate average fuel economy credits that it will sell to run a group and to potentially external customers at
A market-based price all in all combined after sales new services and Cafe represent in our construction around 4% of onare revenues in 2025 as mentioned previously EV volume growth will rely on the ability to get to price parity with ice vehicles this means that we’ll gradually reduce price
On a like fik model however this does not mean that aare will deviate from The Motto that has been the Hallmark of Runa group’s outstanding turnaround value over volume the price reduction will be synchronized with our cost reduction programs to ensure that we’re constantly increasing our margins our mix with our upcoming
Launches will be balanced between B and C segments before we get to the cost of good sold let’s talk about distribution cost First opare will focus on the most profitable channels as we do with very strong discipline on the Reno group onair expects its retail sales to
Account for more than 50% of the mix ahead of most major mainstream M secondly our Europe for Europe business model from a manufacturing and supply chain perspective will allow us to quickly adapt our production levels to demand with one clear goal always produce one car less than the
Demand this will ensure that we avoid having to do incentives to clear stranded inventory finally we’ve signed specific agreements with with our distribution Network in Europe to ensure that distribution costs in our Network in Europe are lower than on the ice side from an already low base we’re working
With this very strong Network to continuously improve its performance and Target to reduce its fixed cost by 30% at the Horizon of 2030 now for the part that you’re all waiting for the cost of goods sold vehicle cost reduction is going to be a key driver uh to improve
Profitability for us it’s our daily fight this alone justifies running onare as a dedicated EV business I’ve said this before the team has never found as many ideas to lower variable cost than since we started on carve out every day that goes by validates the choice that
We’ve made as explained by Luca we will reduce by 4 % our cost on the Next Generation cars by 2728 our 40% cost reduction road map is clear and is already underway we target a 50% reduction on battery minus 25% on E power train minus 25% on platforms minus 15% on upper body
And minus 50% on manufacturing and supply chain costs I’m actually going to take you through each one of these one by one first on battery we’ll develop fit for-purpose chemistries along two Pathways that we will apply depending on the model with a standardized sale footprint a designed
To cost path aims primarily at achieving the lowest possible cost per kilowatt hour thanks to lfp for example and a designed to energy path aimed at maximizing density to pack more kilowatt hours and more autonomy for a given footprint thanks to nmc in parallel we’ll put the battery at the
Center of the car working on the energy integration with Sela chassis or selta PAC architectures with high modularity and simplicity our approach is not to enter the race for bigger and bigger batteries which makes in our view no sense either from an economic or from an environmental point of view we will
Reduce cost by focusing on right sizing our batteries by up to 20% by improving charging performance with 15 to 80% charge in 15 minutes and pushing all levers to maximize car efficiency from aerodynamics to weight and I’ll come back to that as you can see this is a continuous
Improvement and the journey has already started if you compare where we started on zoi in terms of energy density at Pack level we’ve made continuous progress and see even more opportunities going forward with a Target at 300 wat hours per liter this is enabled in part by a simpler battery structure for example
And I think LC has stated this already from mean to Rena 5 we already reduced complexity from 12 to four modules car efficiency is also driven by the E powertrain in fact in that respect we aim for around 90% battery to wheel efficiency this improved powertrain efficiency translates into five or six kilowatt
Hours of savings meaning a few hundred EUR per car moreover we’ll go for an all-in-one powertrain integration with many Innovations including for example brushless glued stack leading to less Parts more capacity and less costs moving to platforms the the Next Generation cev platform will be a major
Step for us and it will be entirely developed by a we’re determined to push the boundaries in terms of cost but also in terms of performance and modularity by 2028 first the number of parts will be reduced by 20 to 30% on average between the current level and
2030 second highly modular this platform will support batteries ranging from 50 up to 100 KW hours third optimize thermom manag management will improve improve range at low temperature as well as charging efficiency on the upper body cost uh side we will cut cost by 15% since J Le arrived at Rog group
We’ve reduced the average number of parts in a vehicle from 2400 on average to 1100 on mean we know how to do this and firmly intend to keep going to illustrate this our current road map aims at cutting platform and upper body variance by 40% moving from the 1100 Parts on mean
That I just mentioned to 700 Parts in the Next Generation beyond the cost of the upper body itself the Next Generation platform will achieve will achieve improved aerodynamics which is a key lever to increase car efficiency and therefore limit battery size and cost obviously we don’t limit our optimization efforts to the vehicle
Itself as explained before we’re reducing the number of hours to assemble a car and decreasing our Lo our Logistics and energy costs striving for excellence in our operations will result in significantly reducing our manufacturing and supply chain now it’s all about variable cost but it’s also important to keep an eye
On fixed cost we’ve built an organization that challenges traditional OEM setups by focusing only on the things that count technology software and the EV value chain for everything else we leverage on Runo group giving on pair a fixed low cost a low fixed cost base I’ll come to manufacturing an R&D
Um shortly but let’s start with sgna since our brand is already established 98% awareness our fixed marketing expense expenses will remain very low they will be at less than 2% of revenue from day one for example our customers already know Reno 5 and Reno 4 and twingo no need for billions in
Advertising to build these name plates reputation GNA will start at approximately 2.5% of revenue from day one putting us 15 to 20% below the best OEM today and at less than half some of our key competitors overall because onare starts with a scaled up capacity in manufacturing and can stand on the
Shoulders of a large OEM like Rog group fixed cost will remain under strong control and will be a competitive Advantage this scale and capacity effect is also very important to understand from a cash standpoint if you take a step back building such a profitable franchise usually takes a lot of time
And effort but also a lot of cash but opare is different and here’s why first of all we’ve built our EV franchise over several years already and as a result the bulk of the investment is already behind us aair is on a rolling start first from an industrial capacity standpoint arare is fully
Operational day one with a 400,000 units upgradeable to 620,000 capacity in electricity once this capacity is fully utilized our plan is to leverage Rena groups other plants on a contract manufacturing basis to avoid the addition of fixed cost secondly from a vehicle development perspective 80% of the Investments of the four the first
Four models are behind us thirdly as regards platforms we’ve built the ire range based on families around aare medium and aare small these two platforms developed by the way at a cost that’s no higher than an ice equivalent we will that each plat of these platform will each support several cars as Luca
Explained earlier going forward aairs R&D in cap expand will Revol around key four key buckets roughly 30% of the spend from 23 to 31 will go towards software and electronic architecture 25% towards EV and powertrain development 25% towards platform and upper body and the remaining 20% towards
What we call crosscar line in fact aare is the poster chart child of the open partnership approach that we champion at the group level you’ve seen earlier today the software and EV value chains that we’ve built with our partners this keeps us flexible Tech agile and F financially keeps our Capital requirements
Low we’ve covered a large portion of our battery needs to support production until 2031 to do this we’ve invested far less L than the billions in investment in jiga factories that some of our key competitors have announced in fact we’ve invested 75 million without investing directly in mining facilities we’ve already secured
What we aimed for from a raw material standpoint through our battery partners and direct Partnerships we’ve already discussed the savings from Google and the qualcom Partnerships earlier all this translates into a differentiated cash story for opare on R&D and capek specifically you can see on the slide how we benefit from the
Rolling start of Runo group and our unique transversal approach from around 25% of Revenue in 24 we will quickly drop and normalize to around 8% as a long-term Target the average over the 24 to 30 period is 10% you know we can do this from double digit depreciation and
Amortization we’ll gradually come back to Runner group Levels by the way On’s French R&D footprint will allow it to benefit from France’s C rearch which will provide tens of millions of R&D funding every year the result of all this is that aair will not burn billions and billions of
Cash for the years to come in fact we will start generating cash in 2025 after a maximum cash burn of 1.5 billion euros in 24 and the first half of 25 we forecast then to reach about 80% cash conversion rate in 2031 to summarize we have a clear and
Attractive set of financial objectives for onare as previously mentioned we’ll Target a 30% compound annual growth rate by 3031 to reach Circa 10 billion revenues in 25 on the path to 25 billion by 31 profit and cash Break Even will come in 25 and 10% operating margin in 30 with 80% cash
Conversion as you can see separating onair was the right call to make a successful in EV but why list onair first of all very simply raising capital from a potential IPO will provide resources for aare to grow Revenue profit and cash faster we anticipate using a portion of the proceeds to fund
Capital expenditures R&D and potential external investments in particular in three key areas the first is the strengthening of vamper’s EV and software value chain capabilities without deviating from our low Capital intensity policy the second is our acceleration is the acceleration of our variable cost reduction road map
And the design and development of Vare second generation C platform which I mentioned earlier and finally the development of new cars secondly and more importantly a listing is just culturally right for aare it will ensure that A’s management is truly focused and accountable in the EV and software businesses in the way
That running a business unit inside of Runner group would not do it will ensure a culture of transparency and a culture of focus for our group stakeholders raising cash at onair level provides the best way to accelerate its development and ultimately cash generation without pulling on group resources in turn this
Provides the best conditions to accelerate our road map to reward those shareholders we’re excited about the IPO opportunity because we believe that aare is the only European EV and software player to offer such a unique combination of purity of purpose ready to go tech product and Manu manufacturing capabilities that will
Ensure rapid growth with a horizontal approach and the backing of an established OEM that provide a lower risk investment case I take the opportunity to remind you that part of the proceeds are already secured when the Investments of our first cornerstones Nissan and Mitsubishi in get investing together up
To 800 million euros in our franchise they should also be joined shortly by qualcom considering an investment I want to be clear though we believe that op’s IPO provides provides an optim an optimized path to its success but because we’re so convinced of A’s value we will not do it at any
Price we’re preparing ourselves for an IPO in the first half of 2024 but we’ll proceed only if we’re comfortable that the market will sustain the right valuation for this great franchise as you know Runner group now generates more cash than it ever has in the past this gives us ample flexibility
Regarding timing and market conditions to wrap up the listing of onair provides an opportunity to further accelerate the development of aare without drawing on Runner group’s resources and allows Runner group to accelerate its road map to reward its shareholders the IPO will not only raise funds but more
Importantly it’s a project driven by operational and cultural motivations and with that I’ll hand it back to you Luca for a Conclusion thank you thank you ter don’t worry it’s not going to be very long so what we have uh laid out uh today are all very tangible objectives I think we have the right receipt right and ingredients to achieve them we have the right strategy we have the right product
Lineup the right setup and the and also the know how one year ago as we announced in our CMD and as as I reminded you earlier we have started to redesign uh Rena group as a Next Generation OEM and after having achieved one of the fastest turnarounds in the
Recent history of this industry we put this company back again at the Forefront of innovation we have reorganized it pushing autonomy responsibility down to the businesses designed around the new Automotive value chains fit to capture value where it will be building their ecosystem with the the best Partners to
Summarize actually we design a corporate architecture to optimize return for Rena group our shareholders but also the minority shareholders in some of our businesses each one of the businesses has the right Financial proposition horse and power are about cash generation and yield Alpine is our growth story around Global
Upperhand segments the future is neutral opens sustain sustainable and profitable growth Avenues Beyond cars so does mobilize for recurring Revenue generation with high margin and aair is about as we explained profitable growth with low execution risk growth profitability low risk this will be the obset
Of the 11,000 members of our aair team I think that together with our employees and with our new investors in aair we have an opportunity to create something truly remarkable truly great uh in Europe making EV accessible and profitable in this part of the world finally I want to thank you
All for your continued support I want to thank the team and I want to thank the people that uh organized this event we are as said incredibly excited to take the plunge with aair and I’m looking forward to sharing with you our progress all the time introducing the first and
Unique European pure player to the public Mark markets and now we have the time for the Q&A so TI and I will be open to your question but I think we need to leave a minute uh of room to the to the teams to get the setup done thank you very [Applause] Much [Applause] so we happy now to uh start the 45 minutes uh Q&A session uh just to let uh everyone ask their questions please uh only ask one or two questions we’ll start with the sign number four George Goldman sax please if you can stand up please George Gallia Goldman Sachs um
Thank you for the we know you George thank you for the presentations obviously a big element of this plan and its success is down to the variable cost improvements that you outlined on the battery side where you’re targeting a 50% production can you just give us a bit of context in
Terms of what the starting point is with a 50% cost reduction do you expect to be at the levels where you perceived Tesla to be today or at the levels where you perceive Tesla and other Market leaders to be in the 2027 time frame so the is
The answer is the second one of course what we’re trying to do is to be extremely open to be flexible and find any new solution is coming one of the things that we clearly see in that space of battery is you know a strong evolution of the technology it’s not
Only about chemistry Choice it’s everything that goes with it is the you know all the setup the integration of the battery on the chassis the fact that you give up I don’t know the battery case or you know the um let’s say the how do you call it like uh to to you
Know the system to to Thermal management the the thermal management everything so so we’re going for a very extreme uh solution and uh uh we think we will be there when we need to be at the level of the best one in the world right so um and you have Power
Electronics that goes with it integrating different parts of the thing so we going to go extreme that’s why we do we it’s not anymore kind of an incremental uh approach to what we were doing in the past is that we try to Li frog the thing and to basically the
Challenge for us is to do two generation in one generation this is what we have have to do and we determined determined to do that thank you L will continue um with enman B hi thank you for taking my question I just had a or two clarifications actually the timeline that you’ve shared
With us um does that require proceeds from the IPO or and maybe you can share with us how much you would ideally require how much you would accelerate or delay the timeline depending on whether you go ahead with the IPO and the second clarification was I think tiu um
Reminded us that some of the proceeds are already secured through your partners n Mitsubishi and Qualcomm um is that also the case if the IPO would not go ahead at the time and if so how would you then determine the price for that investment thank you hey hey look uh you
Know on the first question so um the the the timeline of the invest investment Etc I mean look I I I I hope uh it was clear in the in the presentation um you know we’re we will generate this year more than two and a half billion of cash
At the runal group level we generated uh 2.1 billion last year um we have a you know significant amount of cash in the balance sheet now uh so we’re we have ample resources to fund the development of aare if for external reasons the IPO were to be delayed right so we will plow
Ahead no matter what this is you know the the easy uh the easy answer to to your question um it’s a crucial crucial project for us as as you can see the cash burn is relatively limited and it split over a period of 18 months so
There’s no question that uh that that we can go after you know the speed uh with the resources that we’ve got um on the on the second part your question on the proceeds from Miss Nissan and Mitsubishi in fact um when we concluded when we negotiated the agreements with Nissan and
Mitsubishi um they actually wanted to be in this project right and the result of that is that if the IPO did not go ahead there is an alternative investment agreement so if we were to um develop a different structure forare uh but still keep it as a separate uh as a separate
Vehicle uh Nissan and Mitsubishi were eager to be able to participate to that project in any case you know you have to realize for them it’s a it’s a bridge head for electrification in Europe and they want to be part of it so uh that that uh that contribution is not
Conditional to the IPO we’ll continue with number five four sorry Ros Su GP Morgan J need the mic thank you very much J Morgan couple of questions please can you talk a little bit about the absolute capex and R&D requirements of the business on a two to threee view and
Maybe how does the balance sheet look like uh from the beginning uh and then second question coming back to the to the cost savings you want to achieve in power training and battery can you give us a sense of how much is it technology related how much is it price Downs that
You get from suppliers that may have already been signed already uh with with them so so on on the first part on the uh R&D capex and and uh and the way the balance sheet looks um so so first of all you know onare is live since the 1 of
November um and so it’s it’s an existing business and already and already and uh when when we uh when we set up that business we we put in it all the ingredients to make it successful right and and we talked about a lot of these ingredients uh today the manufacturing
Plants Etc but we also put the IP right so the past uh research and development is in the balance sheet of a today going forward as I mentioned you know the curve in R&D and capex is going to go down in a very steep fashion because of
The volume ramp up but from a funding perspective I think the the way to look at it uh to be very very uh sort of uh you know to give you a very short summary when we do the IPO the proceeds of the I of the IPO uh will come L fund
Onair um with no debt so the the goal is for onair to be fully funded day one and to not have to go back to require fund funding uh either on the market or to run a group so that’s that’s what the balance sheet should look like so we
Raise the funds through the IPO that mostly probably almost entirely goes to aare to fund it that creates some cash on the balance sheet it consumes a portion of it through the cash burn and then starts generating cash in its own right and continues its its path that’s
The philosophy of the the business structure that we’re inventing that we’re putting in place at the group it’s true for aare it’s true for horse that will be managed that way as well it’s true for flexus on the lcv side so we try to create businesses that have the
Right level of autonomy and the right level of account accountability and to achieve that we make them autonomous from a funding perspective on the cost side uh you know you’ve seen you have one part is about battery and power train then you have the other part is on body and you know
The reduction of the parts and then you have of course an impact on manufacturing the on the cost of things so I’m not sure how much it will be of course the both the two the second two is about how you do things and what kind of Technology you’re using or are you
Are using using technology yeah because if if we are able to get to 700 Parts on a car it’s just like because our Engineers will Design the things differently right and then ran will you know manufacture them quick etc etc on the battery I’m not sure I can give you
Number but I guess you have two effects one is we see a tendency for raw material to go down because of you know the context in general also because there is a lot of battery capacity maybe not located in Europe right now but in general compared to three 4 years ago
There is a much more understanding that battery capacity will be there right so you have a lot of oems uh you know battery produced that turn at 30 40% of their capacity uh so and and you know the general context will help us uh and
The macro will help us to get you know lithium Cobalt nickel at the the we already seeing that so there is an effect on on the thing you of course if you if you get into lfps or other technology uh it’s the same thing because you are you are not using so
Many rare Hearts where there might be a risk of of um let’s say uh scarcity and don’t then therefore speculation so lfp in our mix compared to two three years ago when we started the project will have a much bigger role also because uh energy density of LSPs is getting so
Good that you can actually fit in the space you have enough energy to to make sure that the car goes for you know with a good range and and with the right power uh but what is good about lfp apart from a technic point of view it allows as you you know
To better master in more stable chemistry better Master thermal propagation etc etc is also the the fact that the material that I use in L lfp are less volatile so this we see there is that this effect and then of course there is also the the way we will Design
The B will integrate into the things so I will give you the answer because I don’t have it but it’s it’s a mix of both things somehow but if if you take U maybe a comment on the raw material side um you know we we do uh every couple of
Months we do a full forecasting raw material by raw material with some of our internal services and external Partners typically banks that do commodity forecasting in the business case that we presented to you we don’t have major variations in fact uh we have a slight decrease in lithium in 24
Reincrease after that and we actually have a slight increase in both nickel and Cobalt uh coming in the coming years so we’re not banking on cost production coming from raw material coming down it’s mostly our own fact so it’s mostly a technology play with the chemistry the packaging and the efficiency that’s
What’s ultimately going to get there afterwards the changes in raw materials everyone’s going to you you know get the same uh so if they go up and down uh we’ll have to manage it like all all the competition will have to as well one of
The things that uh maybe is was not so obvious into the thing we we we’re making the choice of not installing a part capacity and pay that ourself giving us the but even in the car we we don’t think it makes a lot of sense to
Put a lot of battery because first it’s an ecological disaster uh and uh and we think that uh maybe for example we we have a you know a battery with the right energy density but may maybe with fast charging capacity uh because you know of everything is cost and weight uh Etc and
We think at Renault in a cradle to grave uh you know with the credit grave approach we don’t look at only the thing so we believe it that’s the best the the better filosophy in in the long long term this will also allow us to have a
Different philosop we had in the first generation by reducing the battery we have there hopefully uh for example infrastructure will you know with the time will get better and better so people have to load less energy on board from the from day one and that will
Reduce the cost I mean typically a car like this that will be used in uran environment doesn’t need like a 50 kilowatt uh you know battery to do what it has to do because for example we have the numbers on the data spring don’t know the is not here because it’s in
Portugal today but but and the data spring is a average we it’s connected car so we know we know the usage of the thing is 30 kilm average distance traveled every day and it’s 26 kilm per hour in average that’s yeah and there you can put a you know a relatively
Compact battery cost is down and then we can offer a car that people can use and that is very sustainable uh for less than 20,000 that’s the philosophy of Rena I’m not going to put a 200 KW battery on a pickup truck that’s doesn’t make a lot
Of sense so why do we do then electric cars we’ll continue with the sign number one PI from Ste this is pi with Ste thanks for taking my question I don’t know who’s going to take uh that IPO related question again um maybe to get it on a
Different angle can you walk us through the different moving Parts regarding the funding or cash burn or regulatory needs at group level that requires an an IPO of aair as we will receive a lot of push backs regarding the already mentioned IPO as you have alternate cash uh
Sources namely the Nissan shares that are located into the the trust and the other push back that we get from investors is that open opening the empir box to minority investors is going um to um leak value uh to those new investors at the expense of the Runo shareholders thank
You yeah look you know I’ll try to answer the second one first you know the question is do you want to have 100% of a small pie or 80% of a big pie you know for us the the name of the game with the IPO is to try to accelerate the value
Okay by accelerating the value onair of onair without pulling on the group resources and that that all introduce the second I mean I guess your first your first question we’re self-funding that development and therefore we’re enabling the rest of the group to reward the shareholders faster I want to
Comment a few seconds on what’s rest what the rest of the group is you know the rest of the group is Dasia you know incredibly profitable franchise okay the rest of the group is Rena International you know we do great business outside of Europe in North Africa in Latin America
Etc the rest of the group is Light commercial vehicles you know very very profitable franchise for us as well so what we’re doing is keeping at the group level you know a a a part of the business that generates a lot of cash and we gr and and we grow and we’ll grow
Uh we’re putting you know some invest on International sales as well fabis and the team had the occasion to describe what we’re doing for the Reno brand outside of Europe um and so we’re going to grow that okay and continue make it cash at the group level and the parts
That require investment we we make themselves funded you know so take horse Okay horse is going to be a uh structurally cash generating entity from day one because it’s going to work on a Cost Plus basis right B because it’ll do 15 billion of Sals the synergies that it will generate
Between us and gie okay will more than offset the C The Cost Plus in the second year of operation so we’ll start paying the engines and their gear boxes cheaper than if we had manufactured them ourself right so we’re going to generate more cash just because we’re paying the
Engines cheaper and we’re going to have a large shareholding in something that’s going to grow just generate cash and generate dividends for us right so so that’s the recipe that that we’re putting in place you know I I guess in a nutshell I hopefully that answers your
Question I have another you know I want to build on what the said your theory is that investors are actually rejecting the thing right that’s your theory so you come here you don’t ask a question you make a statement okay we also had a lot a lot of early looks with people and
We actually had a different you know impression and we met a lot of people on the thing just to also to make the whole project more credible more solid so the feedback that we have is different okay uh and how can the investor you’re talking about Judge about the
Opportunity or the IPO or not the opportunity without seeing the numbers that we have presented today so the old game starts today you look at the numbers you look at the thing that multiplies the the volume by 25 that goes from 0 to 25 billion thing with 10%
Margin with you know uh break even on cash flow and operate after you know one year into the game with all the things you’ve seen and then they will judge and we will see I I’m I’m not making any judgment we are here to present our project we have been working two years
And a half to do the thing and we are confident that we have a very very very solid argument and this thing is unique in Europe Europe and Europe actually needs people like us to push those kind of project if we don’t want to be behind into the game you know and confronting
Us on China ETA we need many of those projects and we need the support of everybody to make it happen and we’re taking responsibility and look you know as as luuka mentioned in the in the conclusion you know different investors have different expectations you know at the group level you have a balanced
Portfolio of activities that have have you know diverse profiles from a financial perspective you know some yield activities some growth activities Etc on is a pure growth activity so we think it’s going to appeal to different types of investors as well uh and in fact one illustration is probably that
We would you know never have brought qualcom into a discussion to invest in run a group they are however very interested in investing in opair just because it’s a different profile and I I think that brings us an opportunity generally speaking to to get you know more funds to do what we
Want to do from a business standpoint so we have a question from Tom sign number four thank you thank you uh I have a few questions as well please uh first you want to be one of the companies bringing price parity by 26 27 ice bevs what happens if
Some your competitors do that before that like in 25 or in in 24 because the market uh for B slows a little bit uh and some of your competition brings in uh products quite aggressively think of Tesla or Hyundai or whatever uh do you have the latitude to uh even accelerate
Uh your cost Reduction Program that the first question uh the second you have now or at least you’re showing us a portfolio of products that could eventually sell somewhere else than in Europe uh is it thinkable that opair goes beyond Europe and gives itself the possibility to compete uh in other
Markets and last we question more about details uh you show us 2023 with having half of its revenues to partner from Partners can you be a bit more precise tell us what it is and give us just a rough ID of Prof fora numbers for 23 24
What do the losses look like uh even if we just as an idea of magnitude to be able to compare that with Ford or other companies that have shown huge losses we understand where you want to go in 25 Break Even uh but the starting point is
Interesting as well thank you you want to answer to the first one in terms of ability to go down of course I mean we sorry we’re in competition to so there might be people better than us but that’s why exactly we’re doing aair we’re trying to set up a system that can
Compete at the highest level and play finals of Champions League because we are not doing that today so we recognize this we have to accelerate and we put ourself in the condition to do I mean even on the other side of the world they have two eyes you know two hands and two
And two two legs so if they do it we can do it right and that’s the spirit of the thing uh but maybe no I would just say you know I was going to say the exact same thing you never know what the competition is is doing our our
Responsibility is to gather as much external information as we can on what is actually happening and I can tell you that since we have a dedicated onare team we’re getting a lot more information and then draw plans to be competitive based on the information we’ve got if it evolves we’ll adapt one
Thing I will say is uh you know when we did the Capital Market day one year ago uh we had the same kind of financial guidance in a nutshell because we said break even in 25 and you know roughly 10% operating margin in 2030 so the end
Result is the same but the way to get there is dramatically different you know last year the revenue that we had embedded behind those numbers was significantly significantly higher and we saw what was happening from a cost perspective and a price perspective with the competition and we put the teams to
Work to revise the profile and that’s how we came up with the 40% reduction so look we analyze and we adapt but it’s it’s never a guarantee right um you know it um I’ll let Luca answer on the sales outside of Europe but I’ll touch on the partner sales um we have uh
In Cleon we have some uh internal combustion engines that are made today and in mge we manufacture kongu I and EV right and so we had a choice between moving those things outside of those plants to make them 100% EV incure 100 hundreds of millions of moving cost and
Potentially have plants that will not that were not fully utilized or uh let those uh products and components go until the end of life and maximize the financial outcome on the short on the short term and we opted for that so on the one hand if you’re negative you can
Say but then you can say but then you’re not a pure EV player but okay it’s going to be a very small portion in a few years but you can be positive by saying that’s a stable business that we can count on and that acts as a buffer if
Ever we have tactical fluctuations in the market like maybe we experien this year so I think uh you should look at it as a risk mitigator in fact and then maybe on sales outside on sale of course from a commercial point of view uh I think those cars they might go let’s say
Everywhere we’re preparing you know versions for Japan for Korea we’re moving the car some of them to Latin America where we are present or you know we just launched the I don’t know the mean to turkey was a you know actually very impressive success so I think commercially we will go immediately
Everywhere we can okay uh the question is is aair you know potentially one day also expanding in terms of operation outside of the European per let’s see of course it could be uh I think that there are there are potential uh there that we will explore but let’s first consolidate
You know and make this machine work today using electricity as a you know an and and France as a bit of a pavot of everything and then we’ll go out uh you know I I also had to I also had to solve a lot of issues that were embedded uh
You know we work hard with all the team with John Dominic Etc to find solutions for the French uh let’s say ecosystem because 3 years ago we had a lot of holes you know into the thing right now France is you know with the latest decision on flexan I think we are we’re
Fine and let’s make them work and then you know think about opportunities because we have to follow opportunities for sure if you want to keep uh you know very competitive and play against the Chinese against Tesla Etc we need to be very very aggressive and fast that’s
Also important you you asked a question on the profile of 23 24 so you know we we’re not going to give you any any numbers but we gave you the cash burn and and the curve to get to the revenue so that gives you a rough idea of what
We’re looking at right I’ll let you do the math we’ll continue with the sign number two alri from CT thank you so much um thanks for the very detailed presentation um two quick questions um just on pricing can you just talk about that a little bit more I
Mean 25 and 20,000 for your products you know are very impressive numbers um but it’s super important that you hit them because that’s where the demand you know levels are going to be if you then look at the the the revenue projections right we’re projecting on average 33,000 or so
In in 2025 dropping down to so you know under 25,000 on average can you talk about how fixed those cost projections are for you um what what risks there are to those pricing strategies um and what drives the the 33 to 25 reduction in price per
Unit that you have in your forecast um is it mix or or you know how does the content provis change and then secondly um very interesting the setup and thank you for detailing a little bit the the contractual nature between Rena group and aare is it possible that you can give us
A little bit more detail you know the the the the repayments that aare makes to Reno group are they all of a variable cost nature or are they fixed you know as a proportion of the fixed cost for Rena group as well you know and similarly on the financial services side
Um how are you going to share the profits mobilize makes on ampare vehicle because sorry a lot there but um okay uh so so on the average revenue per unit um your your math is approximately correct uh you have to keep in mind that there’s Revenue that comes from uh partners and
After sales Etc in there so it’s actually a little bit lower than the figures that you’re stating uh just just to be clear um from the the mixed portion of that uh today’s revenue is only mean which is a c segment car uh ultimately the mix becomes you know
Roughly 5050 between the B segment car and the C- segment cars so that has a has an impact um which you can see in the bridge uh the the rest comes from the cost the cost reduction activities that that we partially give back uh to the consumer uh on your second question the
Relationship relationships between Reno and and aare so um uh as I said there’s kind of four categories there’s a category of Supply agreements when when a makes a car for Reno or Etc so that’s uh you know basically a a variable cost type of structure um there’s uh service
Agreements so some of them are ad hoc service agreements for the development of a specific upper body for example uh so that’s a fixed cost you know that will come at the moment of the development then there’s uh uh sort of manufacturing and Supply services so this is when
Uh aare uses some of the workforce of Renault to organize the logistics and organize the purchasing so that’s kind of a variable cost right and then there’s General services such as isit support uh you know a portion of my team is going to be built at opare for
Accounting services and stuff like that and that’s fixed cost right so there there’s a combination of all that all of these have been you know sort of put into very specific contracts negotiated in fact I think um one very important thing to have in mind is um
The basis that we use to elaborate these contracts is is the ones that we use for horse so in horse we have a partnership with jile an external partner an external partner so you know we had to do something that was very arms length so we took that as a basis simple and
Simple it’s very simple we took that as a basis and adapted it to the opair model and you know it it obviously has to be tax compliant and and all that so it’s a you know it’s a very very uh I would say simple arms length type of uh
Relationship and it’s also the fluxes are actually relatively bad yeah I think it’s important to think that you know there’s this kind of mindset that it’s only one way but it’s actually balanced you know between the things that opare is going to do for renal group such as EV development software development
Things like that and the stuff that Reno is going to do you know some of the upper body development the flows are actually pretty balanced so it’s it’s not like there’s someone that’s dominating the other um and I and I think you know the quality of that setup
Is that it forces competitiveness you know we already have discussions with people in horse and people in opair saying well you know that that uh long-term service agreement uh for finance maybe I can do it a bit cheaper on my own those are great discussions
You know they’re the on that we want to have because ultimately they’re the ones that are going to enable the group to become more competitive that’s kind of the recipe sign number four Steven rman from societ General thank you um again thank you for the presentation um very impressive how
You are um emphasizing the relevance of the French Industrial base with electricity and talking about bringing cost to East European levels you say by 2025 so I’d like to question then maybe how what steps are you actually taking Beyond you’ve mentioned about the the the reduction in hours are taken but
Clearly there are substantial cost differences between Eastern Europe and the north of France just in terms of Labor alone and if you can get cost down to this level why do you need to make twingo then in maybe in outside France um for two simple reason one is that we are
Full and uh and this in France on all sides at that Horizon and the second is that I Al also have the responsibility for other people where I haven’t you know found the solution so far so um so we haven’t decided it’s not official but
Uh you know today revos is uh let’s say producing the twingo EV so it’s one of the options that is open on the table so I think we need to be uh let’s say flexible also strategically the the let’s say the the real the real Target of this thing is to be extremely
Competitive terms of cost so we’re going to do everything that is necessary within you know European environment to to bring you know the sourcing the all thing the development cost down because we want to offer uh you know we want to respond to the challenge that the system
Is giving us to be able to offer a a profitable uh small car electric in Europe with of a new generation below 20,000 EUR one thing that’s important to have in mind is uh on on an EV the labor content is lower than it is on an ice
And actually for us um the value of transformation in the plant is lower than than the logistics cost so having the proximity actually works great it’s actually a net net good guy to have the suppliers in France around you it’s better than having the plant far and suppliers that
Need to ship stuff across the world not to mention the ESG implications and I think we also have a responsibility to to France and to Europe you know as Leaders as economical leader so that’s why we do it we take the the challenge we have a new question sign number
Four yes Ren gulo in s Pao I have a question on the new Revenue string coming from software defined vehicles um you you didn’t give any let’s say aggress particularly aggressive indication on in your plan uh like like some others I was was wondering also considering I would say the better
Margins which uh U new service revenues should have uh is it a fair assumption to expect in the second part of the plan uh these kind of RS to reach uh at operating profit level 5 to 10% of your uh your uh Target for anair thank
You El uh well I look I think 5 to 10% is you know probably not very far uh from from the probably closer to five than 10 with the assumptions that we’ve built in I mean as Luca said and I said we took conservative uh approach to it
Just because you don’t know I mean I don’t know how much you’ve paid for apps on your cell phone recently uh but you really only pay for things that really provides a lot of value right and so we’re comfortable that that’s going to happen on charging services on you know
Very specific apps but not I think it’s it would be ambitious at this stage to put in the business plan, 1500 or €2,000 like some others have done if it turns out uh that that uh that that becomes more a bigger Revenue stream we’ll be happy but at this at this stage
We wanted to have something conservative yeah as we said during the said during the speech that make it more clear we took we justify from a business point of view the uh the sdv coming from the other angle so from things that we know
We know to manage right so if I tell you an sdv car is a car that is uh for three generation for threey connected to my after Sal service from to my cloud that nobody can get in and I keep the connection with the product I will make
Money uh you know in after sales because today we probably lose I don’t know 50 60% of the uh let’s say 50% of the customer after warranty expires you know that thing mechanically will keep the product not the person or the customer the product maybe 15 years
Into the system so I can upload functionality maintain the thing Etc so it’s a very basic no no fancy stuff right if I tell you that the car uh will be able to be upgraded all the time of course a car where you change the functionality and the state of the art
Has a better residual value than a car that stays with the functionality of 5 years before right and we make estimation and you have seen that in some connection cars you can see for example Tesla has has had at the beginning a very high residual value one
Of the reasons is not only the appeal of the brand but was also the fact that the car could always be uh upgraded okay so we factored into our business case this and the other thing from a pure cost point of view you you are in a sector
Where semic conductions going a doubling uh Power every 18 months so you have 80 CPUs today you have five tomorrow those are going uh you know twice as fast every 18 months one day those five will cost less than 80 with all the connection and all the things Etc and uh
And we know because of the the way the sdv gives us capacity the operational system Android based Etc we will slash by 50% maintenance and development cost into the thing so speed will be higher cost will be less that’s why we justify we I’m not counting on the fact that we
Will invent the magic fancy service that everybody will want that will pay hundred of Euros uh uh a month do this that I think it’s very risky but if it comes uh if it comes we will do it I the first car on which sdv will come will be
Actually Flex evant this is a commercial vehicle designed with an electric skate designed for professional use on that case we can clearly see the benefit of having a microservice architecture where we can add services for people that are delivering stuff ex and connecting this vehicle to the software of the company
This is very obvious but for a private customer it’s you know I wouldn’t do it that’s why we we we have been very prudent we have a question for sign number four thank you it’s Michael Jack from Bank of America um I’ve got two questions first one is just on pricing
And more specifically on um the execution of of price reductions would you be looking to pass on some of those cost savings to Consumers on models that have already been launched as as Tesla have done for example and how would you consider um the negative implications for customers residual values as well as
Your own for the leasing business and then secondly is just on um your growth assumption the 30% Kar Target by 2030 just want to sort of read that in conjunction with the 25% market growth that you highlighted in one of your slides and if you were then to also
Consider mixed dilution and uh price reductions would suggest very significant outgrowth versus the EV Market I just wanted to get a sense for would suggest what outgrowth out outgrowth yeah um if you could just give us a sense for how you think about that um and is there an element of
Cannibalization of existing Renault IC and hybrid cars thank you look maybe I answer to the first part of the thing maybe we can bu that I mean on the pricing thing let’s look at look things like this we have been very disciplined uh you know in the time in a time where
The you know the market has been very shaky Still Still is with people you know dropping pricing and then bumping back etc etc so we have been keeping the thing because you know we are here on the EV market for the long term right so this is is a ride that will probably
Last 20 years and so it is right now the time where you uh uh let’s say set the basis for a healthy business otherwise we go back to the times where we were pushing cars you know and and killing our profitability Etc so it’s very important for us that we keep a very
Healthy business in fact when you look at mean residual value even even in a very complicated let’s say environment the mean res value are very high and they are actually increasing so good sign because that thing from that thing you can then you know uh build competitiveness because maybe with those
Resal value you have very uh you know competitive monthly rates of the things so for me it’s very important that as much as with it for the overal group even within ampare value over volume it’s a clear you know uh you know the order of of things okay uh in fact uh we
Are already doing a lot of effort to reduce the cost of the car if you look at the cic and you compare the relative position of the cic to the mean actually the C is already much more competitive okay and that that means potentially we will have to adjust a few things but
There are different way of doing that you can lower down the price you can for example increase the content for the same price for the customer so you don’t have an impact on residual value you can actually play with the margin that you have that you make your uh financing
Offer leasing offer more competitive yeah but you don’t destroy the the value the the residual value of a car is very much influenced by the right management of the balance between how many cars you put in the market and how much demand it is it’s clear right so that’s that’s the
CH that’s a real you know secret source to do that and so far uh we had of course to do some sacrifice not push many mean channels and you know zero kilometers Theo cars we kept the thing right and we are very happy the car is a
Conquest car you know feedback is very good quality is good you know let’s look a little bit long term and not panic on the on the ker I think um you know it’s 25% growth rate on the European market and we’ve embedded 30% you have to take into consideration that
We’re starting with one car so we start from a very low base uh so that’s that’s part of the answer you know and and so at the end when we get to the 1 million Vehicles it’s a range of seven cars so we’re really kind of in a transition
Phase where we’re phasing out zo and soon to phase out twingo EV so we are actually at a low point in terms of EV penetration and then as we gradually build the range we’ll cover a bigger portion of the of of the market today we’re on C segments only with Manan and
We’ll be on C segment on B segment and on a segment so that explains you know better Market coverage we’ll take a last question uh so for sign number two Andrea Bal Med good afternoon thanks for taking my question I’m a general one about the full Electric market in Europe we are
Around 14% 177% penetration but is probably touch lower compared to initial expectation for this year uh in the chart you have put in your presentation you have a target of around 75% penetration by 2030 uh that is a big acceleration in the next years uh uh
What do you expect for the next 12 months uh when should we expect a real acceleration for this penetration and what could unlock uh this Market in Europe it’s just a matter of offer and pricing or there is also something more structural that could unlock this Market thank you
I mean my my my take up on this is uh is that uh you have a in terms of offer is becoming already you know uh let’s say pretty wide in Europe but of course uh for example there’s nobody that’s really you know tapping into you know for
Example small car and uh because they won’t be ready maybe there will be some you know Chinese cars coming from you know as a CBU to Europe but this is not a sustainable business so we’ll be a couple of years ahead of the any anybody
With those three cars and this if if you combine both of this is like uh 35% of the European market okay so I think we need to get people you know give to people the car that they can afford or they want to buy it’s very difficult to
Say what uh let’s say what will happen the next month we don’t have a crystal bow we can make hypothesis scenarios for sure what happened uh in the last months was uh you know inflation was strong uh you know energy cost was scary for some people of electricity maybe linked to
Gas fluctuation you remember a few a few months ago uh infrastructure are not picking up at the speed that is required and very important this is still not a natural uh you know demand the EV the the EV demand if we want that thing to
To grow so quickly okay so it needs to be subsidized so and there’s been a lot of of countries in Europe that have taken subsidies out of the thing and you we could clearly see the effect on that so our call is to the authorities to the government if you wanted to
Decarbonize transport just be aware that you will need to put in your budget some money to actually accompany let’s say and facilitate for the people this transition to electric car that’s very clear if we see that subsidies are going to continue to go down because they
Going to have to put the money somewhere else then you can come up to some conclusions and that will be slower because we will we will reduce the price of electric cars to the level of ice cars so there will be a moment and it’s
Not like in 10 years time where uh the price of the car will not be the problem anymore okay but of course right now it is because of the things we know and we probably need you know local authorities to bridge that time and to allow us to
Make money because if we don’t make money you know it’s a stred with short plages and then at the same time give the people the chance to jump on an electric car but you know 12 you know getting three four uh let’s say Five Points in a
In a year in terms of percentage is actually pretty massive right because you have never seen a technology going so fast in Europe look at for example just for your culture look at how fast diesel establish itself in Europe how fast hybrid established and compare with the
How fast electric are going to the thing reality is that the the regulat has decided that in 11 years which basically is too cycle for us that means that the decision that we are making today will actually go even beyond the decision I’m making on the product today they will
Tap into the you know company you know p&l until 2040 because I need maybe 3 years to do a car okay this is 27 you put two cycle of 6 years 27 + 12 is 2039 so already now we are beyond the limit that the authorities are giving us
You see what so that’s why I’m telling you the the train has left the station that would be not coming back may maybe we can argue that EV won be won’t be 100% maybe it will be 80 maybe it will be 60 but 60 means 8 million electric
Cars in Europe right and I take I take 10% of it because that’s my fair share there are no group and it’s 800,000 we’re not so far away from the numbers that we are mentioning maybe I’m going to sell a few cars uh around and I feel
The million that I’m talking about so that’s what it is it’s a very structural movement and there is no way back I’m the first one to say that you know going only on one technology is a bit risky okay but the the electric part will be a
Big part of the European market because it’s the low it’s the low okay um thank you very much for attending today and I hope we were able to share with you the excitement of the launch of vampir if there are no media questions um we will end this session
Today and of course the investors relation team with Philippine and the Press relations team will be available to answer to all your questions thank you very [Applause] Much For that
Follow Capital Market Day Ampere with velotype, where Luca de Meo, CEO, Renault Group, and Thierry Piéton, CFO, Renault Group, present Ampere’s strategy and its mid-term financial outlook.
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