Renault CEO Luca de Meo on Thursday questioned the knowledge of value cuts rivals have been implementing in a bid to bolster market share for his or her electrical car fleets.

“We have seen rivals transferring costs up and down, and many others., and many others. that is their resolution. However I do not assume it is a very wholesome observe in the long run,” he advised CNBC.

“As electrical automobiles are ramping up in Europe, we have to have a wholesome enterprise, and so, within the case of Renault, the very last thing I’ll do is to compromise on the margins, you understand, of electrical automobiles.”

De Meo’s feedback comply with a string of aggressive value drops introduced by automakers Tesla and Ford amid stress to stay aggressive in a burgeoning EV market.

Tesla threw down the gauntlet with its mid-January announcement of value reductions for U.S.-marketed fashions throughout the board and for its Mannequin 3 and Mannequin Y inside Europe. Ford adopted on Jan. 30 with value trims for its electrical Mustang Mach-E crossover.

Nevertheless, De Meo signaled that gross sales value volatility might erode client confidence in EV merchandise.

“Our precedence might be to defend the worth for the client,” he stated. “As a result of these sorts of swings are sort of worth destroying for the client, take into consideration residual worth, and many others.”

Renault’s long-term allies are becoming a member of the French automaker’s EV push, with Nissan earlier this month pledging to purchase a stake of as much as 15% in Renault’s electrical unit Ampere as a part of a broader overhaul of the businesses’ 24-year union. Underneath the reshaped, beforehand lopsided alliance, Renault will scale back its shareholdings in Nissan from roughly 43% to fifteen%.

“My job is to make the Ampere case so attention-grabbing for them [Nissan and junior alliance partner Mitsubishi] that they may determine of their capital allocation conferences to place cash there and never in an alternate undertaking,” he advised CNBC, including that the funding was not a situation of the restructure.

Earlier on Thursday, Renault reported that its group working margin doubled to five.6% in 2022 from 2.8% a 12 months prior, whilst web revenue swung to a 700 million euro ($748 million) loss. It got here after the corporate in Could wrote off a 2.3 billion euro impairment linked to exiting its Russian positions.

Renault posted document money circulate of two.1 billion euros final 12 months, in contrast with its steering of above 1.5 billion euros. Internet revenue from persevering with operations elevated to 1.6 billion euros, from 549 million euros in 2021, whereas group revenues inched as much as 46.4 billion euros in 2022, from 41.7 billion euros a 12 months prior.

Renault shares have been largely regular at 1 p.m. London time, down modestly in intraday commerce at 42.96 euros.

De Meo stated he sees ongoing longevity within the provide and logistical obstacles which have plagued automakers because the onset of the Covid-19 pandemic, particularly linked to the yearslong world scarcity of semiconductor chips.

“We expect that, on the semiconductors, [it] goes to proceed to be just about of a problem for one more couple of years, particularly on the sort of semiconductors that we use within the automotive trade,” De Meo advised CNBC, estimating that logistical and element hurdles led Renault to underproduce by 300,000 automobiles in 2022.

He forecast comparable losses in 2023.

“So it will keep there. However I believe we’re a bit of bit extra ready. We all know the best way to discover the components and the best way to set up manufacturing to maintain doing it. However we now have to acknowledge that this isn’t going to be, once more, a traditional 12 months,” De Meo added.

Regardless of this outlook and a “nonetheless difficult surroundings,” Renault targets a gaggle working margin at or above 6% in 2022, together with operational free money circulate at or above 2 billion euros.

It additionally put ahead a dividend of 25 euro cents per share for fiscal 2022 — marking the corporate’s first payout proposal in 4 years, in keeping with Reuters — because of be paid in Could, if permitted through the firm’s annual normal assembly in the identical month.

Correction: De Meo forecast comparable manufacturing losses in 2023. An earlier model misstated the 12 months.