Renault, Volvo, and CMA CGM collaborate to pioneer electric vans in European logistics sector

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Renault, Volvo, and CMA CGM collaborate to pioneer electric vans in European logistics sector
Credit: © Reuters.

In a significant development in the European logistics sector, Renault (EPA: RENA ) Group, Volvo (OTC: VLVLY ) Group, and CMA CGM are joining forces to develop a new generation of electric vans. The partnership aims to capitalize on the anticipated tripling of the European market for electrified vans by 2030, driven by climate change concerns and CO2 regulations.

On Friday, the companies announced their plans to establish a new independent company based in France. The entity will leverage their collective expertise in electric vehicles, commercial vehicles, and logistics to produce a range of fully electric, software-defined vehicles from 2026. These vans will be built on a novel Light Commercial Vehicle (LCV) skateboard platform offering modularity, cost-effectiveness, and adherence to safety standards.

The new company will benefit from substantial investments committed by the partners. Both Renault, which according to InvestingPro data has a market cap of 10235.22M USD, and Volvo, with a market cap of 42336.52M USD, are each investing €300 million while CMA CGM is contributing €120 million through its PULSE Energy Fund. The companies will maintain their competitive stance in other domains.

The upcoming electric vans will feature an 800V battery capacity and software-defined systems for delivery tracking and performance assessment. This high connectivity offers unique monitoring features that are expected to provide unrivaled performance and reduce cost of usage for logistic players by 30%.

This venture aligns with the France 2030 call for projects aimed at decarbonizing urban logistics. The partnership between Renault and Volvo has been fruitful over 35 years, producing successful models like the Renault Master and Trafic commercial vehicles. As per InvestingPro Tips, Renault's revenue growth has been accelerating and it is a prominent player in the Automobiles industry, while Volvo, which boasts high returns over the last decade and a significant dividend to shareholders, is a prominent player in the Machinery industry.

The leaders of the partnering entities have expressed excitement about this venture. Martin Lundstedt of Volvo, Luca de Meo of Renault, and Rodolphe Saadé of CMA CGM all see this collaboration as a smart allocation of capital towards addressing logistics challenges with innovative solutions on the Software Defined Vehicle platform.

The combined expertise of these entities positions the newly formed company as a formidable contender in the electric van industry, offering substantial opportunities for e-commerce and rental businesses. With Renault's strong earnings allowing for continued dividend payments and Volvo's cash flows sufficiently covering interest payments, as noted in InvestingPro Tips, the financial stability of these companies further strengthens the outlook for this venture.

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