Production partnerships
Why Ford is turning to Renault for its next B-segment EVs
Ford’s decision to source two small electric vehicles from Renault’s AmpR platform marks a shift away from deep alliances toward pragmatic manufacturing partnerships.
Mergers between and acquisitions of vehicle companies have been commonplace throughout the industry’s history. Indeed, GM itself was formed out of a series of mergers and acquisitions worldwide. PSA was the result of Peugeot acquiring a struggling Citroën in the 1970s, later becoming Stellantis when acquiring Opel (out of GM) and later acquiring Fiat-Chrysler. Chrysler itself had once been part of DaimlerChrysler, a merger which only seemed to work on the back of the enthusiasm of two sides’ CEOs at the time. And where full mergers or acquisitions have not taken place, cross-shareholdings have been an option, with the Renault-Nissan Alliance perhaps the best modern example, although this too has been wound down in recent years for various reasons.
The news that Renault will build vehicles for Ford at its Douai ElectriCity factory is entirely consistent with Renault’s current strategy. It is also consistent with Ford’s renewed efforts to get its European operations in order to cope with the EV transition
Mergers become partnerships: Sharing platforms and technology
The alternative to the above is a form of partnership focusing on sharing technologies, platforms or manufacturing resources, or a combination of the three. This too can take various forms; for example, Ford makes the Volkswagen Transporter in Turkey, while Volkswagen makes the Ford Transit Connect in Poland; or take Renault and Geely, where the Renault factory in Korea makes the Polestar 4 for Geely’s premium EV-only brand. In this case, the alliance has led to Geely taking a stake in Renault Korea of 34.02%; subsequently Geely has taken a 26.4% in Renault Brazil and Renault will make models for itself using Geely technology while also making Geely models under contract. Note that these shareholdings are in the country operations only and not in Renault itself. The two companies have a 50-50 joint venture in Horse, an ICE focused partnership. It is worth noting that Renault has not taken a stake in Geely in return.
The Renault-Geely tie-up in Brazil came soon after Francois Provost took over as CEO of Renault; significantly he was formerly the senior behind-the-scenes executive at Renault in charge of setting up partnerships. In various interviews since taking the job, Mr Provost has indicated how much he likes partnerships as a means of building Renault’s business. With that in mind, the news that Renault will build vehicles for Ford at its Douai ElectriCity factory is entirely consistent with Renault’s current strategy. It is also consistent with Ford’s renewed efforts to get its European operations in order to cope with the EV transition.
Ford benefits from B-segment EV platform
Although much remains to be confirmed, the outline details of the Renault-Ford agreement are interesting; Renault will produce two EVs for Ford, using its AmpR small car platform. This underpins the Renault 4 and 5, as well as the new Nissan Micra. These vehicles will allow Ford to offer EV-specific models in the B-segment. Using core AmpR technology, the first of these will effectively be an electric replacement for the Fiesta. The second model, reported by Autocar as likely to be more of a crossover, could be a (partial) replacement for the Puma, although as this already has a pure electric version there could be some downside risk for Ford here, as it could cannibalise some Puma-E sales.
Whereas the Nissan Micra, which Renault already makes, is very similar to the Renault 5, the Ford models are expected to have very different designs, as well as “distinct driving dynamics”, and “authentic Ford-brand DNA”. Quite how this plays out in practice remains to be seen.
The partnership with Renault came as a surprise to some in the industry as press reports and industry rumour had suggested that Ford would continue its arrangement with Volkswagen for this size of vehicle. The assumption had been that the new Volkswagen ID Polo would form the basis for the effective replacement for the Ford Fiesta and certainly this would have been a logical move, for both Ford and Volkswagen given existing arrangements. However, Ford’s experience with the Volkswagen MEB technology for the Explorer Sport and Capri made in Cologne has been disappointing and Ford’s Jim Farley indicated that Renault’s proposal was much more cost effective for Ford.
Boosting capacity utilisation
Renault had built its Douai EV factory and developed a surrounding supply network or ecosystem a few years ago. EV production began there in 2022, but the 400,000 units’ annual capacity has not been used to more than 50%. For Renault, the Ford agreement offers an immediate volume uplift and a far better utilisation ratio for its own factory and its supply base. It therefore offers scale advantages and an unexpected recovery of sunk costs. For Ford, there is a ready-made industrial system to produce these vehicles, and it does not have to invest in re-tooling one of its own plants, nor develop a programme-specific supply chain. The Renault offering was as close to an “off-the-shelf” package as is possible. The first Fords under this arrangement will appear in 2028. Had Ford chosen to go with Volkswagen, it would be playing second fiddle to Volkswagen while it actually got its ID Polo and ID Cross programmes up and running. And this would probably have meant Ford would have had to wait until 2029 at least for its own vehicles.
For Renault this arrangement continues a strategy it already has with Mitsubishi. Here, Renault is making four models for Mitsubishi to help the Japanese brand return to the European market
The Renault-Ford announcement also contains an elliptic reference to a letter of intent to develop commercial vehicles together in future. It is not entirely clear what this will entail, nor when it might start. Quite what this will mean the existing Ford-Volkswagen van alliance is also not clear. But all that is for another day. The Ford-Renault link-up is interesting: it offers Ford a relatively quick entry into an EV segment in which it has only limited and dated products and for Renault it offers a means to achieve improved utilisation and overhead recovery at Douai where its own volumes have been disappointed to date.
Moreover, for Renault this arrangement continues a strategy it already has with Mitsubishi. Here, Renault is making four models for Mitsubishi to help the Japanese brand return to the European market. Three of these, Colt (based on the Clio, and made in Turkey), ASX (based on the Captur and made in Spain) and Grandis (based on the Symbioz and made in Spain) are petrol-engine models. The fourth is the Eclipse Cross EV, based on the Scenic EV, and made in Douai where the Ford models will be made.
Manufacturing partnerships to help one company get into a segment where it lacks a presence and to help the other side improve factory utilisation are increasingly common. They are quicker and cheaper for vehicle manufacturers to develop; they are also less risky than joint venture which involve cross shareholdings. Expect more of these in future.
