When Tesla decided to cut prices on its cars in January, it was expected to trigger similar action in the rest of the industry. Some automakers followed suit, while others said they had no plans to reduce their prices. The CEO of Renault, Luca de Meo, went a step further and faulted the trend.
De Meo told CNBC, “We’ve seen competitors moving prices up and down, etc., etc. this is their decision. But I don’t think it’s a very healthy practice in the long term. As electric cars are ramping up in Europe, we need to have a healthy business, and so, in the case of Renault, the last thing I’m going to do is to compromise on the margins, you know, of electric cars.”
While De Meo was worried about profit margins, he also argued that cutting prices promotes price volatility, which reduces consumer confidence in electric vehicles. “Our priority will be to defend the value for the customer. Because those kinds of swings are kind of value destroying for the customer, think about residual value, etc.”
Tesla car owners were aghast at the price cuts last month, as it directly affects their car’s resale value. However, while Ford and other automakers rushed to react, Volkswagen resisted the pressure.
Renault reported a net income loss of $748 million for 2022 due to about $2.5 billion write-off of its Russian positions last year.
De Meo also said the ongoing supply chain issues would likely persist for a while.
