ARKANSAS, Sept 23 (Future Headlines)- Renault, a global automotive giant, is navigating the evolving automotive landscape in Brazil, where traditional combustion vehicles and electric cars are vying for dominance. In a strategic move, Renault has decided to maintain the production of ethanol-fueled combustion vehicles in Brazil. This decision reflects the complex dynamics of the Brazilian automobile market, where a significant majority of cars are equipped to run on a blend of gasoline and biofuel. According to Renault’s Brazil branch head, Ricardo Gondo, the continued production of combustion vehicles in Brazil is economically viable and serves as a prudent transitional strategy as fully electric vehicles (EVs) require more comprehensive government support to thrive.

In a recent statement, Gondo emphasized the significance of maintaining combustion vehicle production in Brazil, stating, “It still pays to invest in combustion in Brazil.” This assertion underscores the belief that the combustion engine market in Brazil remains robust and provides a dependable source of revenue. However, Gondo acknowledged that transitioning to EVs is crucial for the long-term sustainability of the automotive industry, necessitating substantial federal incentives to facilitate a smoother shift.

Renault has committed to a significant investment of over $400 million (approximately 2 billion reais) in Brazil. This investment encompasses various aspects, including the development of a new vehicle platform to be produced at Renault’s industrial complex in the state of Parana. This platform not only allows for the production of combustion engines but also provides the infrastructure to enable electrification. While Renault has not specified a timeline for manufacturing electric cars in Brazil, the company has announced plans to launch an electric version of its French-made Kangoo van in October. Additionally, the Kardian combustion engine SUV, designed for local manufacturing, is set to make its debut in the Brazilian market.

In Brazil, the automotive industry is witnessing a transformative shift, with electric mobility emerging as a disruptive force. Several Chinese automakers, including BYD, Great Wall Motor Co Ltd, Chery, and JAC, have introduced fully electric models to the Brazilian market. These electric vehicles, sold in Brazil, represent a formidable challenge to traditional manufacturers, shaking up the industry’s status quo.

However, Renault’s Gondo defended the company’s approach, advocating for a “transition period” for electrification in Brazil. He believes that combustion engines will continue to evolve and improve in terms of energy efficiency. To facilitate this transition, Gondo called for government intervention, suggesting the adoption of quotas for tax-free imports of electric cars. This measure aims to protect local manufacturers facing stiff competition from well-equipped, competitively priced Chinese imports.

The competitive landscape in the global automotive industry is evolving rapidly, and China, in particular, poses significant competition. Renault’s CEO, Luca de Meo, recently highlighted the fierce competition in China, emphasizing the need for rapid adaptation. Renault is actively pursuing its electric vehicle strategy, with plans to spin off its EV unit in collaboration with partners Qualcomm and Nissan.

The Brazilian government, led by President Luiz Inacio Lula da Silva, has articulated its commitment to fighting climate change. This stance marks a departure from the policies of his predecessor, Jair Bolsonaro, who adopted a different approach. Lula’s administration has prioritized environmental sustainability and is actively working to reverse the policies enacted during the previous administration.

The Brazilian market is witnessing intense competition from Chinese electric vehicle manufacturers, challenging traditional automakers to innovate and adapt. Government support, in the form of incentives and import quotas, will play a pivotal role in shaping the future of the Brazilian automotive industry. As Brazil places a heightened emphasis on addressing climate change, the automotive sector’s response will be instrumental in achieving environmental sustainability goals while ensuring economic resilience.

Writing by Alireza Sabet; Editing by Sarah White