Stop regulating us out of business and make a plan: Renault boss attacks politicians

Renault’s chief executive Luca de Meo has shared an unprecedented ‘letter to Europeans’ ahead of June elections for the European Parliament, pleading for politicians to turn away from rules that are hobbling the auto industry, and to concentrate instead on measures to support sustainable competition.

In his letter, De Meo lists a number of “simultaneous challenges” facing Europe’s automotive industry, starting with the need to meet ‘net zero’ by 2035. “No other industry faces an ambition on this scale”, he says. Other challenges include the digital revolution, that de Meo predicts will mean software accounting for 40 per cent of the value of a car by 2030 - up from 20 per cent today. 

The Renault boss also takes a big swipe at the 8 to 10 new European regulations introduced by parliamentarians every year. “Cars are required to be more sophisticated, more fuel-efficient, and less costly all at the same time. They need to comply with new standards and meet new environmental and social requirements involving an array of tests and inspections,” he says, claiming that EC rules have already had an effect that is totally counterproductive: “passenger cars are now 60 per cent heavier on average. Since the 1990s, this policy has objectively favoured premium models to the detriment of more mainstream models”. 

De Meo says that adapting to the EC’s regulatory constraints has cost many jobs in Europe as manufacturers have been forced to relocate production, and cites a report showing the last thirty years have seen 40 per cent of automotive jobs lost in France, while vehicle prices have increased 50 per cent.

The outspoken executive also points to a strategic imbalance in competition, comparing industry incentives in the US and strategic planning in China, with an ever-increasing framework of new regulations in Europe. 

New rules driving up costs and harming competition

According to de Meo, while China dominates and the US stimulates, Europe’s focus is on environmental and other rules. “On average, between eight and ten new regulations will be introduced every year by the various European Commission directorates between now and 2030”, he says, claiming that auto businesses struggle to meet deadlines and must dedicate up to 25 per cent of R&D budgets to implementing new rules.

“Building cars in Europe costs more”, he says. “A C-segment car made in China has a cost advantage of between €6,000 and €7,000 (around 25 per cent of the total price) compared with an equivalent European model.” 

De Meo says China is handing out increasingly large subsidies to manufacturers thought to be anywhere up to €160 billion, while the US has injected $40 billion in tax credits to green manufacturing. Meanwhile “energy costs are twice as low in China and three times lower in the United States, compared with Europe. At the same time, wage costs are 40 per cent higher than in China,” he claims.

A plan to help the European car industry

The Renault chief executive’s letter calls for a raft of responses from the next European Parliament, including the development of a Europe-wide automotive industrial strategy, and an end to the current system “with the continuous rollout of new standards, fixed deadlines and threat of fines for non-application”. He also calls for the European Parliament to adopt a principle of “technological and scientific neutrality”.

“This means no longer dictating ‘technological’ choices to industry. It means setting goals for industry but not how to get there,” he says, saying this was the old approach that has been “sadly abandoned” in the race towards green goals. e-Fuels and Hydrogen are among the technologies de Meo wants to have the freedom to explore, but he’s also explicit about the need to promote small, affordable European cars.

He wants Europe to encourage cooperative projects to develop and market small home-grown cars, and encourage consumers to buy them through bonuses such as reserved parking spaces, cheaper parking and reserved charge points. “If all the parking spaces in Paris were sized for small city cars, the space saved would be equivalent to 55 football stadiums in the same city,” he says. “They would also be an ideal alternative in the international arena: compact cars are between 20 and 30 per cent cheaper than average; they could create a growth surplus for Europe (€500 million in GDP per year) and create over 10,000 jobs in industry.

“Before the electoral campaign gets under way with its attendant arguments, I wanted to make my voice heard, not to get involved in policy but to contribute to a decision on the right policy”, the Renault boss writes.

“From 6 to 9 June, EU citizens go to the polls to elect their parliament for the next five years. Straight after these elections, a new commission will take office in Brussels”, he continues, “and it is the elected members of the European parliament who will debate and approve the most important decisions for the years to come”. De Meo calls his proposals “ambitious but practical”. 

“They show that the European automotive industry could rapidly emerge as the solution to the challenges facing the continent,” he says. “We are ready to cooperate with all the institutions and stakeholders involved to take these ideas forward. The prosperity of Europe is at stake.”

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