The conventional wisdom in the automotive industry over the last couple of years has been, roughly, the following: Japanese carmakers exist mostly to sell cars to Japan and America; American carmakers exist mostly to make trucks; Tesla is the only EV automaker outside of China that’ll ever make money; Chinese automakers will destroy markets when let out of China; and most European carmakers are doomed.
I’m not sure, ultimately, that any of this will end up feeling correct in a few years. The Morning Dump will take a Slate-ian turn today and will act, to some degree, to counter some of the conventional wisdom of the day. And I’m going to start with Renault, the 19th-century automaker that’s kicking a fair bit of tuckus here in the 21st century.
And it’s not like Tesla is doing all that well, anyway. Managers seem to be worried that the boss’s extracurricular activities are hurting day-to-day operations. It’s always good to question the boss, which is how Nikola employees might have avoided the company’s recent bankruptcy (though, maybe not). Nikola, it should be remembered, was valued higher than Ford Motor Company at one point.
Mercedes is a European automaker that’s not doing so hot, sure, so maybe not all conventional wisdom is wrong.
Renault Had A Record 2024
The automaker we now think of as Renault was founded in 1899. If you’re not good at math, that’s a long time ago. That’s 104 years before Tesla came to exist. That’s 12 years before Chevrolet and four years before Ford. What I’m saying is: the company is old. Given all the upheavals in the automotive industry, you’d think a French car company that’s partially owned by the French state would be doing quite poorly right now. For Stellantis, that’s undoubtedly true.
Renault, though, is knocking it out of the park. It’s not a huge park, right? It’s not launching one over the wall in right at Wrigley Field. They don’t play baseball much in France, so let’s just say it’s knocking a tennis ball over the stands at Roland Garros Stadium. It’s still pretty impressive!
It’s also an apt metaphor, as Renault, especially sans Nissan, is mostly focused on Europe and a few other regional markets. Renault doesn’t sell cars in the United States and, very much unlike its competitors, it doesn’t have a huge amount of exposure to China. It makes a range of affordable cars and trucks mostly for Europe, European adjacencies (Turkey, North Africa), and Brazil.
So far, this has turned out to be a remarkably good strategy for making money. Renault reported its earnings for the fiscal year 2024 (ending in March 2025), and the Renault Group earned record profits of $4.49 billion, ahead of its own forecasts. Perhaps even more importantly, the company managed a strong margin of 7.6%, which was also ahead of its own targets.
How’s it doing this?
“Renault Group continues to improve its operational performance, execute its strategy and deliver on its targets. 2024 was an important year with the first benefits of our unprecedented product offensive. This performance is the result of an in-depth transformation of the company driven by a remarkable collective work. We have turned Renault Group into a much more flexible, efficient and performant company.”
That’s CEO Luca de Meo talking to investors. If you ignore the corporate-speak translated into English, the core of it is that the automaker does three things quite well:
- Develops and produces cars efficiently, allowing it to make cheaper vehicles in a profitable way.
- Has the ability to adjust its product and production mix to meet consumer demands/tastes.
- Is building highly desirable cars for important segments in Europe.
Renault Group, now that Nissan is mostly out of the picture, consists of just three companies: Renault (including its Korean offshoot), Dacia, and Alpine.
At the bottom is Dacia, which makes the affordable versions of Renault/Nissan/Mitsubishi/Dongfeng platforms like the Dacia Spring (one of Europe’s cheapest EVs) and the excellent Dacia Duster subcompact crossover. Renault, the bigger brother, has the slightly nicer and usually more expensive versions of these platforms. Alpine, my favorite, has the sporty cars.
It’s a logical way to organize a modern automaker. Additionally, Renault seems to be the rare modern automaker that’s balancing both a strong hybrid lineup with extremely desirable electric cars like the Renault R5 E-tech.
Renault’s production is also split mostly between Europe (France, Spain), South America, South Korea, and Northern Africa. There’s also a huge production facility in Turkey, which has been beneficial to the automaker this year, as the exchange rate (the Turkish lira is down relative to the Euro) has been very much in Renault’s favor.
Can this last forever? An EU-American or a Chinese-American trade war would only help Renault, as the company largely sells inside Europe and outside of those zones. While an EU-American trade war might delay the launch of Alpine in the United States, it’s possible Europe ends up with better terms in future negotiations.
The company has warned of some potential issues, specifically around the EU’s emissions requirements. The company said it expects a margin of around 7% due to the impact of C02 restrictions and the potential need for the company to buy credits or pay penalties. It’s possible the EU delays some of those requirements.
Overall, Renault is the one traditional automaker that seems to be getting it right. Of course, all of this is relative. Its margins aren’t as high as Ferrari and it doesn’t sell as many cars as Toyota or Tesla. Renault, now that it’s not part of an alliance with Mitsubishi and Nissan, is just highly focused on making the right mix of cars for a smaller market, which isn’t a bad place to be in an uncertain time.
Renault is growing, maintaining or improving margins, balancing hybrid/electric platforms, and largely avoiding trade disputes. Few large automakers can say they’re doing two of those things, let alone all of them.
Tesla Managers Afraid ‘Elon Is Destroying Everything We Have Built’
What’s a non-judgmental and apolitical way to talk about Elon Musk? It’s hard. I don’t really have one.
The best I can do is let Tesla managers in Germany talk through the German business outlet Manager Magazine:
One person involved describes the state of mind of many executives as saying that they used to be proud to work for Tesla. “Now they are ashamed.” His fear: “Elon is destroying everything we have built.” According to another insider, practically no one in the management circle doubts that Musk is causing massive damage to Tesla. And it is completely unclear how to get out of the misery – or “if they will get out at all.”
Why would execs be so upset?
Musk comes by sporadically, say top people, puts the team in a rage, sometimes fires managers or even an entire team – and then disappears again. At Tesla, they call it pigeon-style management: “Fly in, give people a shit and fly off again.”
[…]
They also long dismissed the right-wing agitation that Musk vents on his network X as the “eccentricity of a billionaire”. But that is now over. Ever since he openly supported violent neo-Nazis in Great Britain, since he raised his right arm twice in a row as if in a Hitler salute at Trump’s inauguration and agitated at an AfD election campaign event in Germany just days later , there has been “constant chaos” in the company. A Tesla manager says that “sheer horror” is spreading.
I gotta remember “Pigeon-style management” as that’s a very German way to put it.
Tesla is still the envy of automakers, even as its sales are suffering. The question we’re not going to get an answer to, at least not concretely until the end of next quarter, is how much of Musk’s extracurricular activities are eventually going to hit the company’s bottom line.
Nikola Files For Chapter 11 Bankruptcy
There was a minute there when EV/hydrogen startup Nikola, which went public via a SPAC, was worth more than Ford Motor Company based on its public valuation. A lot of that had to do with GM tentatively agreeing to produce the company’s Badger pickup. If there was a peak of EV hype it might have been this moment.
Quickly thereafter, a short-seller investigation revealed that most of the claims by then-CEO and founder Trevor Milton were false. Milton was tried and convicted of fraud. In spite of everything the company did manage to produce and sell about 600 of its semi-trucks.
Now the company is filing for Chapter 11 bankruptcy protection with the hope of selling the existing assets. From Freight Waves:
Nikola has filed a motion seeking authorization to pursue an auction and sale process under Section 363 of the U.S. Bankruptcy Code. The proposed bidding procedures, if approved by the United States Bankruptcy Court for the District of Delaware, would allow parties to submit binding offers to acquire Nikola’s assets free of the company’s debts and certain liabilities.
“Nikola intends to market and sell all, substantially all, or a portion of its assets and effectuate an orderly wind down of its businesses,” the company stated. Potential buyers could include both strategic and financial investors.
During the sale process, Nikola plans to continue limited operations, including certain directly provided service and support for trucks currently in use, as well as some HYLA hydrogen fueling operations through the end of March. After that point, the company says it will need partners to support these activities.
It’s not clear who a buyer might be.
Mercedes To Cut Production As Earnings Drop
Mercedes-Benz Group saw a 30% drop in operating profits last year, which is probably not going to shock you if you’re a regular reader of The Morning Dump. The company once commanded large margins for its luxury cars, reaching 12.6% in 2023. Last year? It was just 8.1%. This year? The company says it could hit a low of 6%.
A lot of this is rising costs, exposure to China, and the general weakness of Mercedes in Europe and the United States. So what’s the company going to do about it?
Mercedes will reduce the capacity of its German plants to about 900,000 cars from around one million. There are no plans to close plants in Germany but jobs will be cut through natural attrition.
Kallenius would not say how many jobs could be affected in Germany.
Mercedes plans to shift production of one of its compact cars from Germany to its plant in Hungary, where costs are 70 percent lower, CFO Harald Wilhelm said.
It will also outsource areas from finance and human resources to procurement, he said.
It’s a wild world where Renault seems like it’s doing better than Mercedes. As one analyst noted:
“We continue to liken Renault like a card player that may not have necessarily been dealt the strongest hand, but is squeezing and maximizing every point or trick,” Bernstein analyst Stephen Reitman wrote of the company in a report published in October. “It is proving that size alone is not a prerequisite and that speed and agility count for much as well, lessons that many of its larger peers seem to have forgotten.”
Damn, now I want to play cards.
What I’m Listening To While Writing TMD
In honor of Saturday Night Live‘s incredible 50-year run, here’s Elvis Costello and the Beastie Boys doing “Radio Radio.”
The Big Question
What’s your favorite Renault/Dacia/Alpine product?
Renault Alliance/Encore. I had a fleet of them in high school and college. They were simple/honest/reliable transportation. I think the 4 of them I owned collectively cost less than $500. With all those parts, I constantly had reliable transportation and a lifetime of stories and experience.
Living in a city in Germany, I don’t currently own a car, but use a car sharing service the couple of times a month I need one. There are two Renault Zoes outside our building, that we (and many others) use regularly. They’re great, nippy, get the job done. It’s fun when you thrash people in fancier cars at traffic lights, it’s a bit of a sleeper… Range is poor, so we need to get a hybrid or petrol car to e.g. drive to the airport, but for jobs around town I love them. There’s an eTwingo a bit further away I’ve used too, which is similarly good, just smaller and slower.
A car for the masses will always sell well and can probably make money. The model t, VW type 2 , Toyota, Honda, now Tesla? Renailt seems to be going back to that and it’s working.
China shows BEVs can be made cheaply and Europe and China are showing how we can recreate city cars with Bevs. The Japanese have there cheap happy cars the European are starting to get theirs back. Maybe it’s time someone brought a cheap happy car the us.
Dacia Spring! Or specifically my Renault K-ZE, which was the Chinese version of the Spring before it was exported, which was the electric version of the Indian Renault Kwid.
Started dailying it again after being away for a month, and boy is it nimble.
My favorite Renaults? Where do I start!? The Alpine A110 (classic and new)! The 25! The Avantime! The Twingo! The Fuego (shut up, they’re cool!)!
Clearly my favorite would have to be the Dacia Sandero
Who would have thought if you make a good product, people will be it?
This is one of my favorite pet peeves. You remember when Subway came out and soon were bragging about being the fast growing fast food chain in America? How could this be possible? You have BK and McDonald’s. Well if you are new and have 500 units and add 100 units you grew 20%. Do you know how many units the big boys need to add in their saturated market? Tens of thousands. That is why there is no reason to invest based on unit growth percentage. Now even in Europe people laugh at Renalt their heroes are Jerry Lewis and Inspector Cleaseau. With the fiasco a few years back they had nowhere to go but up. Also with an American/EU battle I think it would cause the EU manufacturers to look inward for improvement and that would destroy Renault not help them. One year being good barely rates a look in the auto manufacturers segment the way things are going. In the old days advancement was allowed to happen at a natural pAce. The activist legislate it before it happens is destroying many markets.
Good for Renault. Speak softly and carry a big baguette. Evil Muskrat is hitting the hard end of his celebrity worship. He got lucky because his notoriety made uninformed people think only Tesla made electric cars. He only needed to expand the charging network and rake in money. Megalomania is an addiction. It shows people what you really are.
I disagree Musks problem is not him just being a dick but much like Bud Light he gave the finger to his biggest consumers to attract his biggest opponent. Now granted Tesla has saturated the tree hugger market but appealing to the MAGAs, well it got him liked by more people but no way drivers of pickups are going EV especially with the Cyber truck. He went from a God in the small tree hugger group to the Sheldon Nerd who could help the football team win. I hope his trillions of dollars help him get over it. I bet they will.
Don’t forget that Renault is also making the Mitsubishi Colt (Clio) and ASX (Captur) and in not insignificant numbers…
Current: Alpine A110
Ever: Clio V6 Phase II
If I can go outside my market, the classic Renault 4. Inside, the Renault Dauphine.
I owned a Renault Dauphine as a teen (slow, rusted away) and a Renault Fuego Turbo as an adult (quick, annoying quirks). I like what Renault is doing and would own another one, though it’s doubtful we’ll see them in the US.
When I’ve been down in Arizona, I’ve seen a lot of Mexican Renaults (mostly Dusters and a Duster Oroch) on the road. They look like a decent, inexpensive vehicle.
I had a Renault Duster as a rental in Mexico. It was perfectly cromulent for its purpose of getting me from A to B and occasionally C and D.
I’ve always had a strange attraction to the Renault Medallion, entirely because I like its looks, sedan and wagon.
https://www.curbsideclassic.com/curbside-classics-european/cc-capsule-1987-renault-medallion-wagon-live-like-a-refugee/
I’d have to say Renault R16 though as a complete car. Really quite revolutionary.
https://www.lanemotormuseum.org/collection/cars/item/renault-r16-1973/
There are very few square(ish) car medallions
Avantime, of course. Or is that a Matra? In that case Safrane, I don’t know why but I feel an affinity for the old barge, and the facelifted ones could be had with a Volvo five-banger.
The only Renault/Dacia/Alpine product I own is the Cléon-Fonte engine in my Dutch Volvo so in the spirit of badge engineering and transnational parts commonality I’ll say the Willys Interlagos.
That’s actually a pretty tough question because other than the various generations of the A110, I’m just not familiar enough with rest of Renault’s line up to hold a useful opinion. So, I’ll say the Alpine A110.
Still miss my old Clio, had two, and still is one of those cars that would love to buy new again if possible
I wish Alpine would knock it off with that blue/pink combo on the F1 car. Pick one of those colors please, not both!
The red Renault Twingo Jeremy Clarkson drove into the sea chasing a ferry
I like the Dacia lineup quite a bit. They do basic very well. A nicely-equipped Sandero would fill my needs just fine. No b.s.!
Duster, duh. Then the R5 in all its many, wonderful flavors.
“Tesla Managers Afraid ‘Elon Is Destroying Everything We Have Built’”
And those managers are correct. What needs to be done is the board needs to step up and tell Elon to either quit Tesla or quit politics. And if he does neither, fire him and replace him with someone who will be the full time CEO of Tesla. I think JB Straubel would be a good replacement
“Nikola Files For Chapter 11 Bankruptcy”
It’s about time. I’m surprised this joke of a company lasted this long.
“What’s your favorite Renault/Dacia/Alpine product?”
I don’t have that much exposure to Renault’s products. My memory of them is mainly the crappy Renaults sold in Canada in the 1980s that fell apart fast in Canadian winters.
And the only Dacias we got here were a small number back when the Soviet union was still a thing. And they were generally regarded as being terrible.
And we never got any of the Alpines.
So of this sad lot, I’d say my ‘favourite’ would be the Renault Fuego. They seemed to hold up a little better and had a bit of a cult following.
Not sure if the board is on board to toss the dick. They all appear to well groomed sycophants.
Didn’t realize Nikola was still in business.
I liked the looks of the Fuego. A guy in my neighborhood in Regina had an A110. There were several profs with Renault cars at Uni. Saw a 310 in Montreal in the 70s.
The new 110 looks great.
Renault can start building cars here after all the local manufacturers decamp back home.
Hope it doesn’t come to that, but it appears to be trending that way.
“Not sure if the board is on board to toss the dick.”
In my view, not yet. Sales need to take a disproportional dive in relation to other BEV sellers, which would be followed by a big share price dive.
It’s not just about the board. It’s also about the largest shareholders needing to get pissed and start screaming at the board to do something.
But things have to get worse before they get better. Hence, I sold off my Tesla shares and won’t consider buying in again unless Elon Musk is gone AND he sells off his 13% remaining stake. Also because of Trump’s insane approach to economic policy, trade and foreign relations, I’ve also move a large part of my retirement portfolio out of the USA. So I’m not even holding TSLA indirectly through funds anymore either.
“Didn’t realize Nikola was still in business.”
Yeah… really surprising to me they lasted this long.
“Renault can start building cars here after all the local manufacturers decamp back home.”
Remember that it’s not just GM, Ford and Stellantis… it’s also Honda and Toyota building vehicles in Canada. If it’s one car company I’d like to see back to building cars in Canada it’s Volvo.
Volvo had a long history of building cars out in Eastern Canada before Ford bought them.
All valid arguments.
I could see the large shareholders just dumping their holdings rather than fighting Eldolf and by association Trump and the maggot brigade. Less hassle for them down that road. The big investors in xtwatter are dumping their positions lately.
Any Tesla holding are through etfs in my case. I have never been a fan of him going back to his pre-PayPal days. Always felt he was an unstable blowhard.
Am fully aware of all manufacturers potentially leaving due to the tariffs or the donfathers arm twisting.
I doubt Volvo will return. Way cheaper to build em in China or some other low cost jurisdiction.
In the case of other manufacturers leaving, I’d be alright with the Chinese manufacturers being allowed into the country. Worst case it would replace some of the lost jobs. Maybe cast into the EU to see if any of the manufacturers would like to set up some knock down facilities.
GOOD NEWS!
Hey, someone had to do it
OH NO!
Anyway…
The Tesla shareholder meeting this year will need a lot of popcorn. There will be fireworks this year no matter what happens. The big institutional investors (Blackrock, Vanguard, various state pension funds, etc.) who hold a lot of Tesla stock for different purposes (mutual funds, pensions, etc) will be the ones to watch. If they want Musk gone because he’s a drag on the stock price, it’ll happen one way or another. Shareholder resolution or voting out conflicted board members.
If you are fortunate to have an S&P 500 mutual fund in a retirement account or directly, some of the underlying stock is Tesla. Find out who runs the fund and contact them. If enough of us little people do that and/or transfer investments away from S&P 500 funds, it may just make a difference.
As much as I’d like to see the really big institutional shareholders decide to cash in, they’re still up a LOT of money vs other stocks. Remember that Tesla shares were split 5x since 2019-2020
That said, a few large european funds have sold their shares due to his political activities