Capital Market Day Ampere – Wednesday 15 November 2023, 2pm (CET)
Hello hello everyone good afternoon good morning so thank you for being with us um of course today is a very important uh day for the Renault 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 let me let’s say first remind you in a few words I promise uh where we are coming from as a team so in 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 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 the four B million R&D and capex budget per year so there is no reason why the favorable 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 Johan Dominique people allow me this thing a slightly Barack 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 opportunity to position a ren 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 of the traditional disciplines and for three 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 partnership 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 curves from an organization point of view we are moving from the classical OEM pamal 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 sport to capture the incremental value across the new profit pools emerging within and around our 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 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 Renault Group business today is 80% of mature segments if we do what we have 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 soft 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 Rena 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 ampair name is um tribute to a famous French scientist who 200 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 growth story there is no place on Earth where the the EV Market is going to grow faster than here in Europe around 25% per year until
2030 policy makers have made their call customers are already uh making of battery power cars and mainstream choice we are Beyond we are convinced we are beyond the point of no return the 2035 ice ban regulation has been set EV have reached a double digit 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 uh ups and downs
But we think there will not be a coming back we are talking about a structural change something we haven’t seen for decades leveraging the Renault brand andair 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 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 ampair 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 three on board 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 top of it unbundled from the hardware you have a software platform that you’ll be able to constantly upgrade over the air 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 softw defined vehicle on very straight forward arguments first cost reduction one day five high performance computers in the sdv uh 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 the 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 maybe no one is Imagine 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 Renault 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 leaving 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 to different 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 ampare we have built that step by step so aare 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 the mean ech and it will be
Available of course in the cic E 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 a look at It Oh Oh 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 inh 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 online and experience Hardware integrated like Renault the cheap
Specialist of the Android world that is qualcom and the Google Cloud uh 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 what our think at the beginning so let’s
Now watch what welcom 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 in inovation we share with aair 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 Pur 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 telematics and connectivity digital cockpit and Driver assistance and autonomy and embedded our digital cockpit and infotainment Solutions in the Megan e tech throughout our history of collaboration we have remained aligned on the importance of our
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 20126 this collaboration would represent a significant opportunity not just for or two companies but a significant benefit for the entire ecosystem as it could be offered to other automakers 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 haven’t seen the video but you know Christiano looks like really like a tech Guru with this long uh so adopting a horizontal uh approach and open approach makes uh the sdv of unir 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 we’ll be in the market in 2026 quickly catching up with Tesla where Tesla will be at that time and being on par in timing 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 you might have a few thousand Engineers capable of programming if you rely on a standard but close system then you might have some 10 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 unpair cars and finally don’t un estimate 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
Culture story about functionalities economics and services in particular versus Chinese oems 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 three embedded if it comes we see actually the risk of being front runner in this field we also believe that the strive of all 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 to democratize eveve 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 Eevee 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 platforms 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 aair 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 old system andair is 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 model for example and will 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 a 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 it will start at around 44,000 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 Megan 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 Renault 5 starting at €25,000 matching what many European customers are paying for hybrid cars
Today and pure player competitors are lagging behind the they have so far zero a 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 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 is now stand sending product showcasing
Our EV and software 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 importantly 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 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 cenic total cost of ownership
Is already 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 a second idea to be the materialization of our
ESG in Flesh and Bones I should say more in metal and plastic it is a car born with a purpose 95% of 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 pack 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 to the latest hardware and software techno this is a chance to immediately reconnect with people good memories provoking 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 over the of the over the last six decades you have the possibility to eat 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 Renault 5 and Renault 4 show our Renault leverages software and chips to
Transform cars into intelligent and learning connected products humanizing technology is our CR ATO we will prove 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 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 2021 on top
Of a design able to project this icon 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 Genia Motor Show I already of course test throw it and I can’t wait to open our pre-orders so when it comes to the Rena 4 as is it’s ancester 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 era and we cap capitalize on the winning ingredients of the Rena 5 such as the ampair mo platform and the infotainment with Renault 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 move movie so can we can virtually Recap So I told you about aair project Rena cars into the future but aair as 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 way 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 Twingle this this is a new Silver Bullet for sustainable mobility in urban
Environment thanks to its best-in-class efficiency and fit for Purpose 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 European supply chain and all of that in one product
Ladies and gentlemen the future Twingo 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-ofthe-art TV with no compromise we target best in-class efficiency with only 10 kwatt 100 kilm
Over its entire life cycle the future Tingo will emit 75% less CO2 than the average car sold in Europe in 2023 and of course with zero zero tpipe CO2 emissions I will it will also occupy 20% less space than the average European car and it will be truly affordable with a
Price tag below 20,000 000 without subsidies less than 100 a month for our clients and don’t ask if we can do it we have already done it with the data spring but this time it will be done in Europe and we will develop it now Jil 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 sustainable 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 I’m pair is about democratizing EV for that it also goes beyond the product in fact the first
Wave of buyers the early adopted uh early adopt adopter 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 peace 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 neither 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 foood and it puts us at least half of the time on the shopping list the mainstream 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 the stage with its 4,700 dealership and 8,000 service points we have 30,000 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 unare benefits from the assets proximity and experience of Ren Group after sales and its Zer 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 when 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’s 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 or at the office we also optimize people
Bills thank thanks to mobilize smart charge it chooses the right moment of the day or of the night to charge the car from 20124 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 mobilized charge pass is already giv 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 andare is uniquely also their uniquely position thanks to our investment grade cap Finance arm this is mobilized 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 ampair is equipped to maximize the life cycle value of its cars until now the vast majority of our revenues was 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 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 IC 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 functionalities of the product will come from software and finally Nev will require less less maintenance than an nice 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 these new sports requires different talents different training and a different measurement of the performance we designed from scratch a completely new organization entirely
Focused on EV and soft 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 ampair 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 engineering this will enable the decoupling of software and Hardware uh I would say development Cycles this team 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 aair each employee will generate around 2.5 uh million of business this is five
Times more than today at Renault and three times more than the leading pure EV Benchmark that we know today this ampare 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 has Outreach programs for talents from underprivileged uh backgrounds we have an agreement to hire I think 300 uh 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 example so the ampair leadership team will gather this very important people will gather outstanding talents from
Both Renault 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 techn technology and datadriven governance model we’re talking about core it platforms and compassing 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 a unique set of technology that we developed leveraging Google Cloud technology to sales and after sales with takon to finance with the development of the new
Sap for Anna system this is going to break silence homogenized 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 Luke 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 Improvement in terms of customer relationship Management in terms of
Customer satisf fa action and Supply management finally you will soon witness the artificial intelligence in our cars with Reno the Reno avatar from the launch of the Reno 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 aare the leading EV and software Automotive ecosystem beyond the Ampere perimeter ampere of course it’s a fully fledged OEM operating at scale but it’s 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 andair unique exos system approach is designed to cover all of it very efficiently f focus on what matters partnering with the most relevant players allows us to optimize our investment smartly allocating Capital acquire data competences der
Risk 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 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 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 Co cooperation will ensure as stable and competitive battery sourcing we have
Also chosen two additional main strategic Partners whose battery factories will be uh in France next door to our assembly lines you have first Envision ASC this is a global part player in Battery Technology and factories building its own G Giga factor 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 a successful C Series contributing to a 2 billion fundraising so veros future Giga Factory is in danek 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 AAS a joint venture in Ru this is our plant uh with Min allowing us to 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 uh 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 will be in the market
In 20 27 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 ampair Galaxy is its manufacturing heart that’s electricity it includes four production sites two assembly plants uh D and moers 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 at 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 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 assemble a car in less than 10 hours for Rena 5 it will be 9 hours below a worldwide well very well-known leader an aair benefits from an ideal logistic ecosystem as of today 75% of our suppliers are less than 300 kilm
Away from the plan it reduces logistic costs by 40% and within a radius of 1,000 kilometers 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 that we have
Compacted our plants 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
Fprint 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 electricity Supply contract in France with voltalia using solar panels when it comes to the heat we will re partnership
For low carbon Supply including biog gas by 2025 electricity will have reduced by 90% 90 its CO2 to uh emissions the Amper Galaxy is also about our partners of suppliers we streamlined at 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 headaches aair is in full control for making its panel ESG prodction 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 aair 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 ren group for example there’s mobilize which I already touched upon for leasing
Subscription payments Insurance charging solution battery 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 close loop recycling for battery and
E-motors production scrap and for end of uh life uh Vehicles neutral also gives a head start to ampair to anticipate circular economy regulations the battery directive will impose fixed percentages of recycled minerals within batteries by 2031 and we are ready neutral uh mobilize and ren group of Sals 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 the track record of mobilize 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 the new Commerce billions years decades I guess but aair 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 Renault 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 the R Group has will probably require 3 billion Euro and to have the
Procurement and the investment that we already incurred you probably need another 7 billion Euro so we’re talking about 15 billion and many years of rampar 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 aare 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 B and software related components for the development of nonb specific components for example a seat or a mirror on pair will use Solutions
Across Rena group with the help of Reno group uh with its scale and its purchasing power aare sources the materials it then produces the the vehicles in Cleon and in the electricity plants that Luke had just described once the vehicle’s been produced opair benefits from the extensive retail network of Rog group
For sales and distribution during their afterlife uh during their actual life cycle opair vehicles are serviced by Reno’s after sales network while mobilize 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 costs more than 90% of the vehicle costs are decided and incurred directly by
Aair from its external suppliers or in the shape of labor costs we’re talking about a complimentary 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 Ren group and aair respector respecting clear guiding
Principles number one ensuring business continuity number two setting up the aare and Reno group relationships on an arms length basis with clear accountability and autonomy principles at heart number three encouraging both parties 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 spefic 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 aair and Runner group representatives to ensure that both parties 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 for aare is more than an aspiration it’s there by Design it’s embedded in everything that aare does in the past minutes Luca has in many
Occasions touched on some of the aspects of the ASG strategy so I’m just going to try to wrap it up for you and give you a bird’s eye view on CSG 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 onair positions at
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 carbonization 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 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 for trint by 30% per kilo of materials purchased in 203 versus 2019 by focusing on the six most contributive materials such as aluminium steel and polymers beyond the car the battery Remains the biggest decarbonization challenge for an we’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 produ 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 4 point 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 were 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 On’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 aair in the three fields that are ke 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 run group directors including Lucas the chairman four independent directors and one Nan director from the onset it will display Benchmark diversity
Metrics making aair successful 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 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 from day one to deliver an industry Benchmark level of financial performance with a reliability of an established OEM It’s
The Best of Both Worlds aair 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 two 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 my biare for the rest of the Runo
Group from our break even point in 2025 we have a clear path to reach double digigit 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 Breck in our profitability Bridge first of all aare 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 Renault 5 and Rena 4 by 202 2 in 2026 twinkle will arrive then aair will enlarge its lineup to 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 opare 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 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 90% of re 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
Sold 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 overcapacity in our plants sales to Partners represents almost 50% of V’s Revenue in 20123 they’ll represent a fifth of the revenue in 25
And we’ve embeded Ed in our business case 5% by the end of the decade we’ve been pretty conservative we have only included in the figures 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 Reno group and capitalizing on the connected cars as mentioned earlier after sales revenue will be marginal at the beginning but will increase to hundreds of Millions with the surge of
The number of a 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 500 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 has mobilized finally as it produces most of the EVS of Rena group alair 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 for like model however this
Does not mean that aare will deviate from The Motto that has been the Hallmark of Runner group’s outstanding turnaround value over volume the price reduction will be synchronized with our cost production 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
OEM 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 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 40% 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 Cale 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 sell to chassis or sell to 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 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 Luc has stated this already from mean to
Reno 5 we already reduced complexity from 12 to four modules car efficiency is also driven by the E powert train 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 mov moving to platforms the the Next Generation cev platform will be a major step for us and it will be entirely developed by aare 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 thermal 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 run 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 will leverage on Reno group giving onair a fixed lowc cost low fixed cost base I’ll come to manufacturing and 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 reno4 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 run 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 aare 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 Reno 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 ire 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 onair
R&D and cap expand will revolve 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 aair
Is the poster 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 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 partners ships 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 capex specifically you can see on the slide how we benefit from the Rolling start of Rog group and our
Unique transversal approach from around 25% of Revenue in 24 we will quickly drop and normalized 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 CR rearch which will provide tens of millions of R&D funding every year the result of all this is that a 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 EUR 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 an attractive set of financial objectives for onare as previously
Mentioned will 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 SE ating onare
Was the right call to make a successful n but why list onare 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 important importantly a listing is just culturally right for aair 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 a runner group would not
Do it will ensure a culture of transparency and a culture of focus for our group stakeholders raising cash at on pair 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 opare is the only European EV and software player to offer such a unique combination of purity of purpose ready to go tech product and 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 investing together up to 800 million EUR in our franchise they should also be joined shortly by qualcom considering an
Investment I want to be clear though we believe that opare’s IPO provides provides an optim an optimized path to its success but because we’re so convinced of opare’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 aair 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 Terry don’t worry it’s not going to be very long so what we have U 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 Renault group as a Next Generation OEM and after having achieved one of the fastest turnarounds in the
Recent hisory 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 design around the new Automotive value chains fit to capture value where it will be building their ecosystem with 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
Upper hand 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 obsession of the 11,000 members of our
Amper 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 s 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 for the Q&A so TI and I will be open to your question but I think we need to leave a minute of room to the to the teams to get the setup done thank you very [Applause] Much So we are now to uh start the 45 minute uh Q&A session just to let uh everyone ask their questions please uh only ask one or two questions uh we’ll start with the sign number four uh George uh Goldman sax please if you can stand up please George gallia’s Goldman Sachs um
Thank you for the we know you George thank you for the presentations obviously a big element of this plan and it success is down to the variable cost improvements that you outlined on the battery side where you’re targeting a 50% reduction 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 that 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 choices 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 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 uh and you have Power Electronics that goes with it
Integrating different parts of the thing so we’re going to go extreme that’s why we do we it’s not any more kind of an incremental uh approach to what we were doing in the past is that we tried to Le frog the thing and to basically the
Challenge for us is to do two generation in one generation this is what we have to do and we are determined determined to do that thank you L will continue um with anyman Bas hi thank you for taking my question I just had a or two clarifications actually the timeline that you’ve Shar
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 and mitubishi and qualcom 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 yeah
Hey hey look uh you know on the first question so um the the the timeline of the 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 uh 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 bur is relatively limited and it’s
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 were to um develop a different structure for rare
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 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 D GP Morgan need the mic thank you very much Jose from JP 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 three year 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 train and battery can
You give us a sense of how much is it techn te ology 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 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 on 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 that 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 comfortably 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 are on the market or to run a group so that’s that’s what the
Balance sheet should look like so we raiseed 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 a it’s true for horse that will be managed that way as well 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 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 on the cost of things so I’m not 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 I you are 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 RO here 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 four 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 producers that turn at 30 40% of their capacity uh so and and you know the general context
Will help us uh and the micro will help us to get you know lithium Cobalt nickel at the at the we already seen that so there is an effect on on the thing 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 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 batter 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 chemist 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 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 it was not so obvious into the thing we we we’re making the choice of not installing P capacity and paying 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 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 a cradle to grave approach we don’t look at only the thing so we believe that’s the best the the better philosophy in in the long long
Term this will also allow us to have a different philosophy 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 will 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 dcha spring don’t know the is not here because it’s in Portugal today but but and the daa spring is a average we it’s connected car so we know we know the uses 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 uh you know Rel atively 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 202,000 that’s a philosophy of Rena I’m
Not going to put a 200 Kow battery on a pickup truck that’s doesn’t make a lot of sense so why do we do then electric cars we 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 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 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 that opening the emper 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 Pi or 80% of a big Pi 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 on of aair without pulling on the group resources and that that I’ll 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 second on what rest what the rest of the group is you know the rest of the group is Dasa you know incredibly profitable franchise okay the rest of the group is Reno 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 and we grow and we grow uh we’re putting you know some investment 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 them 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 because it’ll do 15 billion of
Sales 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 gearboxes 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 generate cash and generate dividends for us right so so that’s the recipe that that we’re putting in place you know I guess in a nutshell hopefully that answers your
Question I have another you know I want to build on what the said your theor 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 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 old project more credible more solid ex so the feedback that we have is different okay uh and how can the investor you’re talking about Judge
About the opportunity of the IPO or not the opportunity without 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 0o 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 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 Luke 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 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 how ever 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 U one of the companies bringing price
Parity by 26 27 ice bevs what happens if some of 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 I think
Of Tesla or hyai 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 aair goes beyond Europe and gives itself the possibility to compete uh in other markets and last really question more about details uh you show us 2023 with OP 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 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 you 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 incur 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 uh 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’re 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 experienced 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 conversions for Japan for Korea we’re moving the car some of them to Latin America where we 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 and and and France as a bit of a pivot 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 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 Hope
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 alrix from C 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 for vehicle 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
Ampare is it possible that you can give us a little bit more detail you know the the the the repayments that aare makes to Rena group are they all of a variable cost nature or are they fixed you know as a proportion of the fixed cost for
Group as well you know and similarly on the financial services side um how are you going to share the profits mobilize makes on ire Vehicles 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 mix portion of that uh today’s revenue is only mean which is a c
Segment car ultimately the mix becomes you know roughly 50/50 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 renoa and and on PA 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 uh 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 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 AER 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 or you
Know a portion of my team is going to be buil at opare for accounting services and stuff like that and that 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 used to elaborate these contracts is is the ones that we used for horse so in horse we have a partnership with J 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 opare model and you know 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 Rena group such as EV development software development things like that and the stuff that Renault 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 ones that we want to have because ultimately they’re the ones that are going to enable the group to become more competitive that that’s kind of the recipe sign number four Steven wman from societ General thank 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 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 in 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 at 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 Gul in s Pao uh 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 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 Reven to reach uh at operating profit level 5 to 10% of your
Uh your uh Target for an pair thank you 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 15500 or2 2,000 EUR 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 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 for three generation for three cycle connected to my after sales 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 ofth art as 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 connected cars you can see for example Tesla has has had at the beginning a very high
Residual value one of the reasons 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 semiconduction
Going 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 they will pay hundred of Euros uh uh a month do this 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 flexivan 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 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 Jax 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 assumptions the 30% Kar Target by 2030 you 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 suggest what outgrowth out outow 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 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 bump back etc etc we have been keeping the thing because you know we are here on the EV market for the long term right so this is a ride that 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 residual value are very high and they are actually increasing so a good sign because that thing from that thing you can then you know uh build competitiveness because maybe with those
Res value you have very uh you know competitive monthly rates of the things so for me it’s very important that as much as we did 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 scenic to the Megan actually the C is already much more competitive okay and that that means
Potentially we’ll have to adjust a few things but there are different way of doing it you can lower down the price you can for example increase the content for the same price for the 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 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 and not push many mean channels and you know zero kilometers demo 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 ation that we’re starting with one car so we start from a very low base 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 segment only with mean and will’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 time number two Andrea good afternoon thanks for taking
My question a general one about the full Electric market in Europe we are around 14% 17% 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 is 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 out 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 uh this transition to electric car that’s very clear if we see that subsidies are going continue to go down because they are
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 started with short legs 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 establish and compare with the how fast electric are going to the thing
Reality is that the the regulator 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 to put two 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 there will 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 Z no group and 800,000 we’re not so far away from the numbers that we are mentioning maybe I’m going to sell a few cars 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 much
Follow Capital Market Day Ampere 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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