PARIS — Renault CEO Carlos Ghosn has a new incentive to promote development and sales of electric vehicles: A significant part of his pay now depends on it.
Ghosn, who has led Renault since 2005, was formally named to another four-year term by shareholders on Friday. However, his mission has been significantly altered. Earlier this year he handed off day-to-day operational duties to Thierry Bollore, and he agreed to a 19 percent reduction in base pay, to 1 million euros in 2018. The 64-year-old Ghosn’s mandate now is to prepare the Renault-Nissan-Mitsubishi alliance for a future without him at the helm.
Ghosn’s compensation has been a point of contention in France, with the government (which holds 15 percent of Renault) and significant number of shareholders arguing that he is overpaid, because he receives a separate salary from Nissan. After he lost a non-binding vote on pay in 2016 (and with this year’s vote binding), Renault’s compensation committee held more than a dozen meetings “to better understand this negative outcome.”
In addition to cutting Ghosn’s base pay, his long-term incentives will be reduced to a total of 80,000 shares from 100,000 (Renault stock has been trading at about 84 euros recently). Until this year, his performance targets have been conventional, equally divided among operating margin, free cash flow and shareholder return.
Those targets represent an automotive industry that was more focused on current performance than future adaptation. Recognizing that, the board has changed the criteria to better align with new strategic plans for Renault and the alliance, which call for doubling synergies from the alliance and ramping up EV vehicle sales.
Some of the legacy automakers who are really serious about electric vehicles are also trying to address the issues that come with selling both electric and gas-powered cars at dealerships.
Renault is exploring electric vehicle-only stores and after a successful pilot project in Stockholm, it is now opening a second location in Germany.
It can be difficult for dealerships to sell both electric cars and gas-powered vehicles at the same time since the strengths of one are often the weaknesses of the other.
Car dealers are incentivized to sell what they have on their lots and since that’s currently mostly gas-powered vehicles, they don’t put a lot of effort into selling EVs.
That’s partly why Tesla decided to bypass the dealership model and operate its own stores.
They were proven right by a few different studies of the electric vehicle buying experience. Most recently, one found that electric car adoption is slowed down by ‘dismissive and deceptive car dealerships’.
Now Renault is trying an approach similar to Tesla’s in Europe.
Earlier this year, they opened a ‘Renault Electric Vehicle Experience Center’ in Stockholm, Sweden.
The program was apparently quite successful as Renault reports that it attracted “more than 14,000 visitors in the first three months.”
The French automaker is now announcing that it is expanding the program to a second location – this time in Berlin, Germany.
With the success of the Zoe, Renault has become a leader in electric vehicles in Europe.
Now the French automaker wants to keep the momentum going with an investment of over 1 billion euros to accelerate electric vehicle production in France.
The new plan includes several initiatives.
Renault listed them in a press release today:
Introduce a new Alliance electric platform in Douai to create a second Renault electric vehicle production site;
Double ZOE production capacity and the launch of a new ZOE at Flins, the only ZOE production site in the world;
Triple electric motor production capacities at Cleon and introduce a new generation electric motor from 2021.
Invest in Maubeuge for the production of the next generation of the Kangoo family, including the electric utility vehicle Kangoo Z.E.
Carlos Ghosn, Chairman and CEO of Renault, said about the announcement:
“The acceleration of our investments in France for electric vehicles will increase the competitiveness and attractiveness of our French industrial sites. Within the framework of its Drive the Future strategic plan and with the Alliance, Groupe Renault is giving itself the means to maintain its leadership in the electric vehicle market and to continue to develop new sustainable mobility solutions for all.”