Renault promises to reduce battery costs by 20% and build a “value chain” of electric vehicle suppliers in Europe

Renault’s Ampere division will integrate lithium iron phosphate (LFP) cells into its EV platform alongside the nickel-cobalt-manganese process it currently uses, the company said in a statement on Monday. Ampere will also work with South Korean company LG Energy Solution on battery systems to increase their range.

The new approach will reduce Renault’s costs for supplying batteries to its vehicles from early 2026, the company said. It is part of a broader effort to improve profit margins through supplier centralization and other measures. The cost reduction will help the French automaker keep pace with the industry trend toward cheaper car batteries, which is putting pressure on automakers that use the more expensive NCM chemistry, like Renault.

Renault said it is also working with its partners to build a “value chain” of electric vehicle suppliers in Europe. China’s Contemporary Amperex Technology Co. will supply LFP cells from Hungary, while LG will work from Poland on cell-to-pack technology, which uses a bag-like system to pack more battery cells into a given space. Other Ampere partners have facilities in France.

European carmakers are struggling to compete with cheap models from China, even though the European Union is imposing new tariffs to slow their advance. Volkswagen AG decided in May to develop electric cars in Europe at a price of 20,000 euros alone and to forego partnerships.

Renault abandoned plans to list its Ampere division on the stock exchange earlier this year after investor interest waned amid slowing demand for electric vehicles and aggressive price cuts by Tesla Inc.

Renault CEO Luca de Meo has also been seeking partners to share the cost of developing a platform for more affordable electric cars. Renault and VW held initial talks, but Europe’s biggest carmaker instead announced last week that it would invest 5 billion euros ($5.4 billion) in a joint venture with electric car maker Rivian Automotive Inc.

Automakers are also revising some of their electric strategies to account for the slower-than-expected shift to electric vehicles that remain out of reach for many consumers, from VW’s deal with Rivian that provides access to advanced battery and software technology to a shift in course on battery projects.

Automotive Cells Co., which is owned by Mercedes, Stellantis and TotalEnergies, last month suspended two of its three projects, which are expected to cost a total of 7 billion euros. Faced with falling demand, the companies are considering switching to cheaper cells. VW has said it may delay the timing of its 20 billion-euro battery plan reaching full capacity in Europe.