VOW3 Volkswagen AG

By David Sachs

Renault SA doesn't plan to drastically lower prices, Chief Financial Officer Thierry Pieton said Thursday, after Tesla Inc.'s moves raised concerns about a potential price war in the European electric-vehicle market.

Shares in European auto stocks fell Thursday after Tesla flagged plans to remain aggressive with vehicle pricing. Renault's shares led the way with a 7.3% drop at 1015 GMT, while Stellantis NV, Volkswagen AG, BMW AG and Mercedes-Benz Group AG shed 2% or more.

Renault signaled strong demand in a call with analysts. While the French car maker will continue to tweak prices with things financing incentives, Mr. Pieton said it doesn't feel pressure to slash them.

"The reality is, at the overall group level, the plants are full," Mr. Pieton said. "We are at 100% capacity generally speaking, so there's no big incentive to go cut the prices and kill residuals and go in a spiral that some of the competition is following."

Despite signals about demand, Renault said its inventories grew to 580,000 units at the end of the quarter from 480,000 units as of Dec. 31, and that logistical issues remain.

Tesla reportedly cut prices in Europe last week. In a letter to shareholders Wednesday, the U.S. EV maker said it aims to leverage its cost advantages as rival car makers speed up their EV programs.

Analysts at Bernstein said in a research note that Tesla's commitment to price cuts intensifies competition in the EV market, with Renault, Stellantis and Volkswagen looking particularly exposed.

"Tesla will weaponize its higher standing gross margins, cut prices and try to grow--or maybe just secure--market share. This places immense pressure on OEMs [original equipment manufacturers] who produce EVs in the firing line of Tesla," the Bernstein analysts said.

Write to David Sachs at david.sachs@wsj.com

(END) Dow Jones Newswires

April 20, 2023 07:11 ET (11:11 GMT)

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