Autos giant Renault is betting the market for gasoline cars will continue to grow
Renault sees the internal combustion engine continuing to play a crucial role in its business over the coming years, according to a top executive at the French automotive giant.
On Tuesday, it was announced that the Renault Group and Chinese firm Geely had signed a non-binding framework agreement to establish a company focused on the development, production and supply of “hybrid powertrains and highly efficient ICE [internal combustion engine] powertrains.”
According to Renault, both itself and Geely will have a 50% stake in the business, which will consist of 17 powertrain facilities and five research and development centers.
Speaking to CNBC’s Charlotte Reed on Tuesday, Renault Chief Financial Officer Thierry Pieton sought to explain some of the reasoning behind the planned partnership with Geely.
“In our view, and according to all the studies that we’ve got, there is no scenario where ICE and hybrid engines represent less than 40% of the market with a horizon of 2040,” he said. “So it’s actually … a market that’s going to continue to grow.”
The tie-up with Geely comes as Renault fleshes out plans to establish an EV spin-off called Ampere.
According to Renault, France-based Ampere “will develop, manufacture, and sell full EV passenger cars.” It’s eyeing an initial public offering on the Euronext Paris, which would take place in the second half of 2023 at the earliest, subject to market conditions.
During his interview with CNBC, Pieton touched upon the need, as he saw it, for different types of vehicles. “It’s very important to have, at the same time, the development of our electric vehicle business on one side — with Ampere — and to build a sustainable source of ICE and hybrid powertrains.”
This was why Renault was going into a partnership with Geely, he added, explaining the move represented “an absolute slam dunk” from a business and financial perspective.
This was because, Pieton argued, it created “a world-leading supplier of ICE and hybrid powertrains with around 19,000 employees in the world, covering 130 countries.”
In comments sent to CNBC via email, David Leggett, an analyst at GlobalData, noted that automotive manufacturers could still enjoy profits from the sale of vehicles that used internal combustion engines.
“Margins are generally higher than on electric vehicles, which are relatively costly to manufacture,” he said.
“The gap will eventually narrow as EV volumes rise sharply and unit costs on major EV components fall significantly, but there is still much profitable business to be done on ICEs and hybrids and will be for some time to come,” he added.
“Manufacturers need to be flexible in their powertrain offerings according to market needs — which differ across the world.”
Renault’s continued focus on the internal combustion engine comes at a time when some big economies are looking to move away from vehicles that use fossil fuels.
The U.K., for example, wants to stop the sale of new diesel and gasoline cars and vans by 2030. It will require, from 2035, all new cars and vans to have zero tailpipe emissions.
The European Union, which the U.K. left on Jan. 31, 2020, is pursuing similar targets. Over in the United States, California is banning the sale of new gasoline-powered vehicles starting in 2035.
Such targets have become a major talking point within the automotive industry.
During a recent interview with CNBC, the CEO of Stellantis was asked about the EU’s plans to phase out the sale of new ICE cars and vans by 2035.
In response, Carlos Tavares said it was “clear that the decision to ban pure ICEs is a purely dogmatic decision.”
Expanding on his point, the Stellantis chief said he would recommend that Europe’s political leaders “be more pragmatic and less dogmatic.”
“I think there is the possibility — and the need — for a more pragmatic approach to manage the transition.”
Elon wants the US military to start buying Tesla Cybertrucks – and now they are! The Air Force has ordered two Cybertruck testers for target practice to determine how easy they are to blow up, while Jo makes up a whole new conspiracy theory on today’s explosive episode of Quick Charge!
Today’s episode is brought to you by retrospec—makers of sleek, powerful e-bikes and outdoor gear built for everyday adventure. Electrek listeners can get 10% off their next ride until August 14 with the exclusive code ELECTREK10 only at retrospec.com.
An it doesn’t stop there. We’ve also got exciting new home battery backup and V2X options for Tesla owners, and one Texas EV driver that decided to conquer the Texas floodwaters by harnessing the awesome combined powers of electrons and stupidity (it’s pretty awesome).
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Tesla’s Dojo supercomputer project is reportedly over. Bloomberg reports that CEO Elon Musk is killing the project after a mass exodus of talent from the Dojo team to a competing startup.
Dojo was the name of Tesla’s in-house AI chip development to create supercomputers to train its AI models for self-driving.
Tesla hired a bunch of top chip architects and tried to develop better AI accelerator chips to rely less on companies like NVIDIA, AMD, and others.
It has been running into delays for years.
We previously reported on significant setbacks. In 2018, Jim Keller, the famed chip architect who was first hired to lead Tesla’s chip-making effort, left the company.
Ganesh Venkataramanan succeeded him, but he left Tesla in 2023.
For the last few years, Peter Bannon, who worked with Keller for years, has been leading Tesla’s chip-making programs, but he is now reportedly also leaving the automaker.
Bloomberg reports that Musk has “ordered the effort to be shut down.”:
Peter Bannon, who was heading up Dojo, is leaving and Chief Executive Officer Elon Musk has ordered the effort to be shut down, according to the people, who asked not to be identified discussing internal matters. The team has lost about 20 workers recently to newly formed DensityAI, and remaining Dojo workers are being reassigned to other data center and compute projects within Tesla, the people said.
DensityAI is a new startup currently in stealth mode, founded by several former Tesla employees, including Venkataramanan.
It reportedly plans to build chips for AI data centers and robots, much like the Dojo program.
The company recently hired 20 former Tesla employees who worked on Dojo.
While the program appeared to be lagging behind for years as Tesla increasingly bought more compute power from NVIDIA, Musk has been claiming progress.
The CEO said in June:
Tesla Dojo AI training computer making progress. We start bringing Dojo 2 online later this year. It takes three major iterations for a new technology to be great. Dojo 2 is good, but Dojo 3 will be great.
During Tesla’s quarterly conference call in late July, the CEO claimed that Dojo 2 will be “operating at scale sometime next year.”
Electrek’s Take
It’s unclear whether the report is accurate or if it’s an extrapolation from the talent exodus to Elon killing Dojo, or if Elon was lying just a few weeks ago.
Alternatively, this development may be so recent that Elon went from being confident in Dojo a few weeks ago to disbanding the team working on it now.
Either way, I think it’s clear that the project has been lagging, and Tesla has been extremely dependent on chip suppliers rather than making its own.
I think Dojo being likely dead is not a big loss for Tesla.
When it comes to chip making, developing its own inference compute for onboard “AI computers” was always the more important project.
TSMC is set to produce Tesla’s new AI5 chip, which is coming soon, and we have recently learned that Samsung will be manufacturing its AI6 chip.
I think the bigger concern from this report is that it’s the latest example of an ongoing exodus of talent at Tesla.
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Jack Dorsey, co-founder and chief executive officer of Twitter Inc. and Square Inc., listens during the Bitcoin 2021 conference in Miami, Florida, on Friday, June 4, 2021.
Eva Marie Uzcategui | Bloomberg | Getty Images
Block shares jumped in extended trading on Thursday after the fintech company increased its forecast for the year.
Here is how the company did, compared to analysts’ consensus estimates from LSEG.
- Earnings per share: 62 cents adjusted vs. 69 cents expected
Block doesn’t report a revenue figure, but said gross profit rose 14% from a year earlier to $2.54 billion, beating analysts’ estimates of $2.46 billion for the quarter. Gross payment volume increased 10% to $64.25 billion.
Block raised its guidance for full-year gross profit to $10.17 billion, representing 14% growth from a year earlier. In its prior earnings report, Block said gross profit for the year would come in at $9.96 billion.
The company expects full-year adjusted operating income of $2.03 billion, or a 20% margin. For the third quarter, the company expects gross profit to grow 16% from a year ago to $2.6 billion, with an operating margin of 18%.
Square payment volume in the quarter grew 10% from a year earlier.
Block faces growing competition from rivals such as Toast and Fiserv‘s Clover, though its Square business still gained share during the quarter in areas such as retail and food and beverage.
Block shares were down 10% this year as of Thursday’s close, while the Nasdaq is up 10%. Last month, Block was added to the S&P 500.
— CNBC’s Robert Hum contributed to this report.
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