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A penny for Volkswagen CEO Oliver Blume\u2019s 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.<\/p>\n
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 \u20ac20,000 ($21,700).\u00a0<\/p>\n
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.\u00a0<\/p>\n
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\u2019s or Volkswagen\u2019s plant.<\/p>\n
A Renault spokesperson told Fortune<\/em> at the time that it would continue with plans to develop the car independently, while the deal\u2019s collapse left Volkswagen without a fallback.\u00a0\u00a0<\/p>\n Confirming an earlier Reuters <\/em>report to journalists last week, Renault CEO Luca de Meo took a rather passive-aggressive tone <\/a>as he lamented the breakdown in talks.<\/p>\n \u201cI 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,\u201d de Meo said.<\/p>\n But just a week later, de Meo appears to have taken quite a different approach.\u00a0<\/p>\n \u201cThe 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,\u201d Renault\u2019s spokesperson said, as reported by Reuters<\/em><\/a>.<\/p>\n The spokesperson told the publication that its decision to link up with a Chinese partner was made independently of the collapsed talks with Volkswagen.<\/p>\n A representative for Renault didn\u2019t immediately respond to Fortune\u2019s <\/em>requests for comment. A Volkswagen spokesperson declined to comment.\u00a0<\/p>\n European automakers have been scrambling to find a way to respond to China\u2019s mounting challenge. The country\u2019s EV makers have several advantages that leave it primed to rapidly grab market share on the continent.<\/p>\n While awaiting the expected introduction of tariffs, many have also looked at ways to collaborate with their new rivals.\u00a0\u00a0<\/p>\n 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.<\/p>\n Speaking Wednesday, Stellantis CEO Carlos Tavares said the switch from internal combustion engines to EVs would hit Europe hard<\/a>, inevitably displacing suppliers with products from cheaper locations.<\/p>\n \u201cThe EV race has become a cost-cutting race\u201d Tavares concluded.\u00a0<\/p>\n As Renault builds its own links with China to get those costs down, switching to an \u201cif you can\u2019t beat \u2018em, join \u2018em\u201d approach, VW may look back on their would-be joint venture as the one that got away.<\/p>\n<\/div>\nAffordability trumps solidarity<\/strong><\/h2>\n
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