Presentation of the book 'L'odyssée de Spring: Histoire et leçons d'un projet impossible'

Publication Type:

Compte Rendu / Report

Authors:

Source:

Report of the Gerpisa monthly seminar, CCFA (2023)

Notes:

Marc ALOCHET, Ecole Polytechnique
Christophe Midler, Ecole Polytechnique
Christophe de Charentenay, M@Air

Full Text:

This book is part of a series of studies on innovation in the automotive industry. This research was conducted in three stages.
- Analysis of the Chinese market in 2018
- A mission to China in 2018 and 2019.
- A survey in France in 2021.

The Chinese market has become the largest automotive market in the world. All manufacturers are looking to enter it because it is a big market. In 1993 there was a first joint venture of Renault in China, which was stopped in 2004. In 2013, a joint venture was created between Dongfeng and Renault. The first products were ICE vehicles.
In 2012-2015 Renault tried to enter the market with electric products, but failed because the products were far too expensive and had low performance. Finally, in 2015 Carlos Gohn decided to launch a project to electrify the Kwid.

The question that the authors are asking themselves is how to position the vehicle in terms of price so that it finds its place?

It has to be as cheap as possible, but it has to perform well as an EV. We also have to bear in mind that Chinese regulations are very restrictive and change very quickly. The solution adopted was to go and find Chinese suppliers, and not those of the large international groups. This allowed us to converge on the price target. Similarly, the factory also had to meet the price constraints.

There were therefore many variables. We needed a Chinese base, with Chinese engineers. There was the creation of Electric Golden Triangle (EGT), the use of the Kwid platform, with the knowledge of the electric vehicle and the knowledge of the local regulations. Then EGT had the role of developing and marketing this project.

The result is a lower production cost, while my development costs are shared. The development of the vehicle cost 50% less, and was done faster than what was done in Europe.

The development of the vehicle takes place between 2017-2019. The regulatory context was changing, with many competitors. We had to adapt constantly, we had to make sure that once the vehicle was put on the market, it corresponded to the regulations and the expectations of the customers.

The vehicle was launched at the end of 2019, and the feedback was very positive. However, four events thwarted this success.

The Dongfeng Renault Automotive Company, a joint venture between Renault and Nissan for thermal vehicles, goes bankrupt.
There are distribution problems.
Covid-19: engineering and production at a standstill.
Regulations change abruptly, especially those on vehicle autonomy.

The Spring is withdrawn from the market in China, but the decision is made to market the vehicle in Europe. Dacia will market the Spring in Europe from 2021. It is a light vehicle and costs less than EUR 18,000. It occupies a position that does not exist in France. The vehicle is a great success in Europe.

What management model has made this odyssey possible? Usually, we don't innovate during development, we innovate before. We validate the technology, the suppliers, etc. There are no surprises during development. But here the actors discover a new traction chain, a new economic and regulatory environment, and a strong constraint of time and development cost.

An innovative development model implies a lot of autonomy, a compact team and openness to the external environment. Here we have management by result target and governance that allows transgression. The corporate body is supportive and not controlling.

The project therefore failed in China, but was recovered in Europe. The choice to invest in the European market is surprising: the vehicle had been designed for China, under the radar.

Here we have two opposing modes of management:
- Classical management: design to cost, the design aims at a price objective.
- Effectuation: the definition of the target is part of the process.

Automotive electrification is an innovation which does not come from customers or manufacturers, but from regulations. There is an administered innovation because it comes from CO2 emission standards. Industrial competition is global, but regulations vary greatly from one country or region to another (China, Europe and the USA). For a global manufacturer, it is a problem to know how to develop.

Chinese regulation is an "administered Darwinism", with a strong dirigisme and the desire to create national champions. There is a systemic approach, and a desire to act on the entire sector: development of a battery industry. Ability to activate variables to improve vehicle performance. Mobilise large sums of money to strengthen the sector and change the rules of the game.

European regulation is "fair competition". Technological neutrality, sovereignty of member countries. However, the diesel gate in 2015 marks the acceleration of electrification and a move towards a more assertive industrial policy.

China is far ahead in terms of vehicle fleet and sales. In this country, there has been a victory for the battery EV. In China there are 500 registered EV manufacturers in 2019. In Europe, only the established manufacturers produce EVs, apart from Tesla.

How can a project succeed in a multicultural alliance context? Inter-firm cooperation often fails. Here, the scope of the project provides a strong strategic and cultural integration facility. It was an entity defined as a firm, which makes it possible to integrate very different teams.

Renault experimented with lineage management: managing not only a project but a continuity of projects, which makes it possible to capitalise on the succession of projects.

Success depends on capacities which are difficult to reproduce. Does this explain the fact that Western manufacturers have not invested in the Dacia Spring niche?

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