Volkswagen, Renault, and Stellantis are currently exploring a potential collaboration to produce cheaper electric vehicles to challenge the invincible dominance of American pioneer Tesla and Chinese electric automakers in the European market, Bloomberg reports.
Potential partnership
The three major electric vehicle players seem to resort to their only option to defend their market share against the strong presence of their foreign rivals on their home turf. They are now considering partnering to produce more affordable electric vehicle models, potentially aiding them in shifting customers’ interest away from Chinese players.
“A business-as-usual approach is a losing option.”
Bloomberg
Stellantis Chief Executive Carlos Tavares also noted the “perfect recognition that in the future, the companies which are not fit to face the Chinese competition will put themselves in trouble.”
Some of the options include “pooling development resources to bundling businesses across European borders to better compete in the once-in-a-generation shift.” The report states that whatever happens, it will transpire within the upcoming months.
Factors hurting EV sales
A wide range of factors continue to hurt electric vehicle sales so far this year, including governments’ incentive reduction or withdrawal, rental firms’ electrification pause, and anti-EV issues ahead of the election in the US and Europe.
In fact, these factors have affected even electric vehicle giant Tesla. It hit a 20% market share decline in 2024, losing approximately $150 billion from its market cap.
In addition, the EU is set to launch tighter emission regulations in 2025, making it a “do or die” for most legacy automakers to increase electric vehicle output. If they fail to do so, they may pay an enormous amount of fines. For instance, if it does not lower its fleet emissions, Volkswagen may be mandated to pay over €2 billion ($2.2 billion).
Competition
In contrast to the growing pressure on European automakers, their Chinese competitors, like BYD, continue introducing more affordable electric vehicle models to maintain their market dominance.
BYD plans to debut its latest electric vehicle offerings at the upcoming Geneva Motor Show, including its Mercedes G-Class challenger, Yangwang U8. Its imminent arrival in the European market further increases the pressure among local brands, particularly Volkswagen, Renault, and Stellantis.
In that sense, Renault CEO Luca de Meo has proposed establishing an “Airbus of autos.” It basically means pooling assets from Germany, France, Spain, and the UK by gathering three of Europe’s major players to produce and commercialize cheap EVs.
All that said, affordability remains the top barrier in the wider electric vehicle uptake. As of now, VW, Stellantis, and Renault are independently developing new battery-electric vehicle models with a price point of €25,000 or less. It would be interesting to see how these three major automakers will strive to compete with the growing dominance of Chinese automakers and Tesla, potentially resulting in a ground-breaking partnership in the European market.
