Renault to maintain mixed ethanol combustion engines in Brazil

SAO PAULO (Reuters) – Renault (EPA:) will maintain production of ethanol-fueled combustion vehicles in Brazil, where nine in 10 cars are equipped to run on a mixture of gasoline and the biofuel as fully electric vehicles (EVs) need more government support, the head of the French carmaker’s Brazil branch said on Friday.

“It still pays to invest in combustion in Brazil,” top executive Ricardo Gondo said at an event, adding that the industry will need more federal incentives to accelerate its EV transition.

Renault is wrapping up a $2 billion reais (over $400 million) investment in the country which includes a new vehicle platform to be produced in its Parana state industrial complex, that would allow the company to produce combustion engines in the facilities and “allow electrification”, Gondo said.

Renault did not say when it plans to manufacture electric cars in Brazil, and the only one it sells in the country – its China-made Kwid model, which according to the country’s EV trade association, sold only two vehicles last month.

Renault is planning to launch Brazilian sales of an electric version of its French-made Kangoo van in October, when it will also launch its Kardian combustion engine SUV, set to be manufactured locally.

While Gondo defended Renault’s plans for a “transition period” for electrification in Brazil, rivals such as Chinese automakers BYD (SZ:), Great Wall Motor Co Ltd, Chery and JAC are disrupting traditional local manufactures with fully electric models sold in Brazil.

“The combustion engine will continue to see improvements in energy efficiency,” Gondo said, adding that the government should adopt quotas for electric cars tax-free imports to protect local manufacturers that face highly equipped products imported from China that have competitive prices.

Earlier this month, Renault CEO Luca de Meo warned a “very competitive” industry in China and that it will need to “catch up fast”. The company is planning to spin-off its EV unit together with partners Qualcomm (NASDAQ:) and Nissan (OTC:).

Meanwhile, the government of Brazilian President Luiz Inacio Lula da Silva has placed an emphasis on fighting climate change and reversing policies enacted by his predecessor, Jair Bolsonaro.

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