Renault targets cheaper production costs with French electric car hub

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French carmaker Renault on Wednesday said that it would merge three of its manufactories in northern France to build an electric car hub with cheaper production costs. It intends to turn out 400,000 vehicles a year by 2025.

Renault said building the single plant, known as Renault ElectriCity, would drive the creation of 700 jobs spread across the various sites, which will employ nearly 5,000 people by 2025.

The company, seeking to produce fewer and more profitable cars under boss Luca de Meo, encounters intense competition in the electric car market. It had an initial lead, but the more prominent rival, Volkswagen, is overhauling.

Renault said its French proposal to build a new legal entity and merge the workforce from the three sites has backing from all its unions. However, it will entail further labor negotiations as it restores prior work agreements.

Consultations will involve reviewing gaps between some older contracts of 35-hour workweeks funded for 39 hours. Also, newer ones without the status, said Luciano Biondo, the head of the new industrial hub.

Developments such as these “will contribute to reaching the significant competitiveness to produce B segment cars in France,” Biondo said, indicating to smaller passenger carriers.

Renault stated that Douai is a car assemblage site of the three plants affected by Maubeuge, a retail vehicles assembly plant. In addition, the Ruitz site, which manufactures gearboxes, will be assigned a new electrical component manufacturing role.

It aims to shrink the size of some of the factories and produce some of its forthcoming electric models, like the Megane and next-generation R5, on one assembly line.

Renault has been seeking to slash costs, including redundancies, as it strives to boost its profitability under De Meo.

Electric cars are still more expensive to manufacture than conventional ones, adding to the cost equation. Renault aspired to nudge manufacturing costs within 3% and 4% of the cars’ sale price but was still far away from these levels.

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