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The deep transformation in the auto-industry

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While rising concerns towards the energy and environmental transition jostle the auto-industry, Jean-Philippe Hermine, Director, Environmental Planning and Strategy, Renault and CEO of Renault Environnement, underlines the edge of the Renault-Nissan-Misubishi alliance on the electric market and lays out the Group’s leadership aspirations within this range, in an interview to be found in our latest Responsible Way dedicated to the NEC.

Renault - JP Hermine

Based on the metric developed by Sycomore AM, the Renault-Nissan group stands out with a positive NEC that is well above the average[1] displayed by the auto industry - ahead of BMW and VW, but behind Toyota and PSA. Is this a surprise to you?

Neither the fact that the Renault-Nissan alliance received a positive NEC nor that we feature in the top 3 comes as a surprise to me. This result is consistent with the consensus on these major issues; it could only vary slightly according to the time horizon (short or midterm) or the focus (climate-related, emissions of pollutants etc.) considered.

Our DNA is about developing affordable and disruptive technological solutions. In this respect, Renault-Nissan was very quick to position itself on electric vehicles at a time when the rest of the industry was not yet fully convinced. Over the past ten years, our investments have been focused in this area, giving us a considerable step ahead. Our offer now includes a full range of electrified vehicles. This range will expand going forward, both on the light commercial vehicle segment and with specific products adapted to different geographies. We are already receiving valuable feedback on the electric market and are working on an on-going basis to improve our industrial practices in engine manufacturing. Furthermore, our most recent 6-year strategic plan, published on October 6th, is particularly ambitious in the area of electrification. All recent statements confirm our strategic leadership in the 100% electric segment, on a global scale for the Renault-Nissan alliance and on a European scale for Renault.

Electric range

As a matter of fact, the synergies between the Renault and Nissan platforms will strengthen, which will make Renault-Nissan the largest manufacturer of electric vehicles in the world. These new developments were probably not factored into your rating, so I have high hopes that our NEC will improve even further.

Several car manufacturers had to face serious questions over the actual pollution levels of their vehicles on the market. As the energy and environmental transition gathers momentum, it will continue to fuel these concerns. In light of these ongoing transformations, Renault started a strategic shift in favour of electric vehicles very early on. Do you see these transformations as threats or opportunities?

Our most recent strategic plan shows our level of confidence and our commitment to electrification in the area of mobility. Considering the favourable public policy trends, the auto industry is facing a deep change of paradigm. Having already risen to the challenge of electric vehicles, the new Renault-Nissan-Mitsubishi alliance is in a rather strong position. From our point of view, the energy and environmental transition is, undeniably, an opportunity. Over the strategic planning horizon – effectively by 2022 – Renault’s objective is to electrify 50% of its offer. This involves offering several ranges of electric vehicles to suit different needs: from classic hybrid or “plug in” solutions to electrified engines. And this will have to unfold on a global scale for the Renault-Nissan alliance, and in a higher proportion in Europe and in China, where expectations are clearly much higher.

Furthermore, we have set ourselves highly ambitious objectives in the area of connectivity, including driverless cars – the first versions could be on the roads in the early 2020s. We are even targeting the deployment of a fleet of driverless electric taxis in 2022, with Renault-Nissan acting as service operators.

Alliance 2022

Source :

Does the energy and environmental transition offer any other opportunities?

Yes, many. The development of electric vehicles is creating a need for smart charging services and new interactions with electric grids. Batteries can have a second “stationary” life, for example as a buffer or to store electricity and help manage the intermittence of wind or sun-generated electricity. A car battery can therefore create value for clients and auto manufacturers beyond its primary function, the electric propulsion of a vehicle.

The life cycle analysis (LCA) approach is broadly used by our group to compare the impacts of different vehicles: electric vehicles clearly generate gains (for example, the LCA of the Fluence ZE model). The LCA also provides valuable insights into how the auto industry can curb the carbon footprint inherent to the mobility ecosystem (decarbonisation of the electric mix, frugal use of resources and circular economy, optimisation of battery functionality, etc.).

Electric cars

Source: Groupe Renault - Credits: © Publicis Net Intelligenz /

A growing number of investors say they are interested in the environmental impact of their investments, particularly in France, under the influence of article 173 of the law governing Energy and Environmental Transition for Green Growth, and of the COP 21 summit. Is this a feeling you share, from your perspective as an issuer?

I have observed that investors are expressing growing interest for decarbonisation, and that broadly speaking they understand that environmental issues are fundamental for the auto industry.

I have observed that investors are expressing growing interest for decarbonisation, and that broadly speaking they understand that environmental issues are fundamental for the auto industry. For example, they look at the percentage of our Research & Development budget allocated to environment-related issues (more than 50% for Renault) and they keep a close eye on our strategy and on our compliance with European legislation on the average emissions of the vehicles we sell. This has been very noticeable over the past 3 years.

What have been the major changes in your business over the past 10 years?

Everyone agrees that the auto industry is undergoing several transformations at the same time. On the one hand, the core B2C model is receding in response to new user modes and final clients looking for greater inter-modality and flexibility; they are not as interested as they once were in the ownership of the vehicle: the nature of demand is changing deeply. And on the other, the energy and environmental transition and digitalisation are introducing new playing rules. I am particularly struck by the interest shown by the younger generation in the auto industry, which they rightly perceive as an area of major transformation, full of challenges and opportunities.

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After graduating from the Ecole Nationale Supérieure de Géologie in Nancy in 1987, Jean-Philippe Hermine joined a team of researchers in the North of Sweden working on glaciers in the Arctic and Antarctic. In 1992, he moved to the United States to develop a specialist knowledge in the nascent area of soil and groundwater industrial pollution, with the largest Environmental consultancy firm, CH2M Hill. He then joined the group’s Paris office to develop the business of environmental audits in the context of disposals/acquisitions. In 1996, he moved to Renault, where he managed all environmental audits for the group’s restructuring programmes and corporate deals (RVI, Volvo, Dacia, Samsung, …) In 2009, he was appointed Group Head of Energy, Health and Safety and Environment for Renault’s industrial plants worldwide. Since July 1st 2011, he has served as Renault’s Director for Environmental Planning and Strategy, and is responsible for drawing up and implementing the Group’s environmental policy, covering products, production and all brands and businesses. He is also the CEO of Renault Environnement, the holding that manages Renault’s interests in three recycling subsidiaries.

This publication is not intended to be an offer or solicitation for the purchase or sale of any financial instrument whatsoever. References to specific securities and issuers are for the purpose of illustration only and should not be construed as a recommendation to buy or sell these values. Communication promotional in nature. This communication has not been prepared in accordance with regulations to promote the independence of financial analysis. SYCOMORE Asset Management or management companies involved with the preparation of this document are not subject to the ban on conducting transactions on the instruments mentioned by the publication of this communication.

[1] Based on greenhouse gas emissions and air pollution per passenger.kilometre and ton.kilometre.

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