In what the French automaker’s finance head on Thursday referred to as a downward “spiral,” Renault (RENA.PA) does not intend to substantially reduce pricing on its electric vehicles, including the recently released Megane E-Tech. Instead, it will not join American rival Tesla in this strategy.
After aggressively lowering costs in areas like the United States, China, and Europe to boost demand and fend off escalating competition, Tesla late on Wednesday reported its lowest quarterly gross margin in two years, below market expectations.
Tesla stock dropped 6.6% in pre-market trading in the US and 7% in Germany on Thursday, putting pressure on the industry and causing Renault stock to drop by a similar percentage on concerns about an impending pricing war.
Tesla’s price cuts were described as a warning and a challenge to the entire industry by Renault brand CEO Fabrice Cambolive earlier this week, who also announced that the brand will be examining prices globally.
Thierry Pieton, group finance head, asserted that Renault did not have to imitate Tesla’s action, despite the fact that the Tesla Model 3 now has a starting price of 41,990 euros ($46,017) in France following a price decrease last week, compared to the Megane electric’s starting price of 42,000 euros.
He told analysts that there was no motivation to lower prices and follow some of our competitors’ downward spirals. “If it means slightly lower volumes temporarily, so be it,”
He claimed that once government subsidies were reduced in various nations last year, EV model demand was lower in January and February than it was in March.