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A penny for Volkswagen CEO Oliver Blume’s thoughts. A week after seeing its affordable electric vehicle hopes left in the mud, with a broadside from would-be partner Renault on the way out, the German automaking boss is digesting news that its rival is now linking up with a Chinese company instead.
Renault has announced plans to partner with an unspecified Chinese engineer to create an affordable EV version of its Twingo car, slated to cost less than €20,000 ($21,700).
While Renault plans to design and build most of the Twingo in Europe, the partnership marks the latest olive branch extended by a European carmaker towards its new rivals in the East.
No love lost between Renault and Volkswagen
Talks between Renault and Volkswagen to build the car collapsed after weeks teetering on the precipice. There were reportedly a couple of sticking points, including an argument over whether the car would be built in Renault’s or Volkswagen’s plant.
A Renault spokesperson told Fortune at the time that it would continue with plans to develop the car independently, while the deal’s collapse left Volkswagen without a fallback.
Confirming an earlier Reuters report to journalists last week, Renault CEO Luca de Meo took a rather passive-aggressive tone as he lamented the breakdown in talks.
“I wanted to show that European industry could work together as a team, so I think this is a lost opportunity, but there may be others,” de Meo said.
But just a week later, de Meo appears to have taken quite a different approach.
“The development of the car will be done with a Chinese engineering partner to improve our development lead time and costs. The project is conducted by [Renault EV division] Ampere. The styling and advanced engineering project are made in France, and production will be in Europe, as planned,” Renault’s spokesperson said, as reported by Reuters.
The spokesperson told the publication that its decision to link up with a Chinese partner was made independently of the collapsed talks with Volkswagen.
A representative for Renault didn’t immediately respond to Fortune’s requests for comment. A Volkswagen spokesperson declined to comment.
Affordability trumps solidarity
European automakers have been scrambling to find a way to respond to China’s mounting challenge. The country’s EV makers have several advantages that leave it primed to rapidly grab market share on the continent.
While awaiting the expected introduction of tariffs, many have also looked at ways to collaborate with their new rivals.
Most major European carmakers have now built partnerships with Chinese automakers or manufacturers to take advantage of their technological and cost superiority in the EV space.
Speaking Wednesday, Stellantis CEO Carlos Tavares said the switch from internal combustion engines to EVs would hit Europe hard, inevitably displacing suppliers with products from cheaper locations.
“The EV race has become a cost-cutting race” Tavares concluded.
As Renault builds its own links with China to get those costs down, switching to an “if you can’t beat ‘em, join ‘em” approach, VW may look back on their would-be joint venture as the one that got away.
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