German carmaker Volkswagen has decided to end talks with Renault regarding a joint venture to develop an affordable electric version of the Twingo subcompact car. This development is a setback for both companies’ efforts to compete with Chinese rivals in the European market. The collapse of negotiations means that Volkswagen may have to pursue its own path in developing an affordable electric vehicle (EV).
The goal of the partnership was to share the development costs and overcome the challenge of producing cheaper cars to rival Chinese manufacturers. However, Volkswagen chose to walk away from the discussions primarily because Renault wanted to manufacture the car in one of its plants, while Volkswagen wanted to leverage its existing European production network.
Renault, on the other hand, plans to continue designing its electric Twingo, with a planned market launch in 2026. While Volkswagen has not provided any comments on the negotiations between the two companies, it has stated that it is still considering its options for affordable EVs.
The failure of the agreement is seen as a missed opportunity for Renault CEO Luca de Meo’s vision of increased cooperation among European carmakers against Chinese competitors, similar to the model of Airbus. The alliance between Volkswagen and Renault for the Twingo was seen as a potential foundation for an “Airbus for autos.”
European automakers are facing increasing pressure from Chinese automakers, who are rapidly entering the European market. Chinese brands like BYD are offering smaller EVs priced below 20,000 euros ($21,686), which presents a competitive challenge for European manufacturers. Therefore, it is crucial for European automakers to cut costs and expedite their new model launches.
Despite the setback, Renault remains open to partnering with other companies, including potential collaboration within their alliance with Nissan and Mitsubishi. On the other hand, Volkswagen is expected to make a decision on its EV plans in the coming weeks. Thomas Schaefer, CEO of the Volkswagen brand, has expressed his intention to introduce a lower-priced EV by 2027.
In conclusion, the breakdown of negotiations between Volkswagen and Renault for the development of an affordable electric Twingo is a setback for European carmakers’ efforts to compete with Chinese rivals. It highlights the challenges European automakers face in cutting costs and accelerating their new model launches to counter the growing presence of Chinese brands in the European market. Despite this setback, both companies are exploring other options for their EV plans.