Renault is building an EV R&D team in Shanghai to target mass production of a new model by the end of 2025, but the new model will be built and sold only in Europe, according to a media report.

French carmaker Renault Group is building an R&D team in Shanghai for electric vehicle (EV) development, according to a local Chinese media report.

This is the first time Renault has put the development of a new car in China, with production set for the end of 2025, according to the report from AutoPix today.

Notably, the car will not be built in China, and there are no plans to launch it here for now; manufacturing and sales will be in Europe, according to the report.

Renault has been gradually asset-lightening its operations in China from 2021 to reduce costs.

With the development of this new model, Renault hopes to streamline its supply chain system in China and initially set up a Chinese R&D team, according to AutoPix.

In the past, multinational carmakers' operations in China were centered on manufacturing and marketing, but now many of them have changed this single-purpose layout and started to shift their R&D and supply chains to China to cope with changes in the Chinese market, the report noted.

Chinese carmakers that have entered overseas markets, including BYD (HKG: 1211, OTCMKTS: BYDDY), Leapmotor, and Nio (NYSE: NIO), are targeting the budget small-car segment, while Renault is hoping to use China's research and development and supply chain resources in the EV sector to hold its own ground, the report said.

Renault has set up a dozens-sized R&D team in Shanghai since the first half of this year to work on a revamped EV program, AutoPix said.

The team is part of Renault China's Shanghai branch, but does not have a substantial reporting relationship with Renault China, instead reporting directly to Renault's French headquarters, according to the report.

Renault intends to move more EV R&D to China, potentially building a complete system for EV R&D in China, including software and hardware, the report said, citing a person familiar with the matter.

Benefiting from China's complete EV supply chain, multinational automakers are increasingly moving their R&D and supply chain systems to China, albeit in different ways.

Volkswagen is developing EV models in China and selling them here. BMW and Mercedes-Benz are also developing EVs locally, but with products for the global market, the report noted.

Unlike Volkswagen, BMW and Mercedes, Renault, which operates with light assets in China, is not burdened with maintaining market share in the country.

Renault may now lack interest in participating in China's increasingly fierce EV competition, and is only looking to shift its EV development and supply chain to China, with Europe and other overseas markets as its primary targets, the report said, citing a source close to Renault China.

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