Good afternoon, good morning. Thank you for being with us. Of course, today is a very important day for the Renault Group, and today's objective, just to be clear right from the beginning, is to finally give you details about the Ampere project. But let me, let's say, first remind you, in a few words, I promise, where we are coming from as a team. So in three years, we have executed one of the fastest turnarounds in the recent history of the automotive industry. We have done that one to three years ahead of our commitments, and all of that, as you know, despite a very tough market environment. This was the resurrection phase of the Renaulution. So this team is engaged, it is effective, it is fearless, and I think it can be trusted also for the future.
At the same time, we have prepared the, I think, the best product lineup this company had in decades. It is focused on high growth and profitable segments and markets. It is designed not only to address the core combustion engine market today, but also, and most importantly, to be a leader in the mounting EV market with two EV native platform. And this was, for us, the Renaulution phase, and it is working, I promise you. I would challenge, in fact, any analyst, we have many here today, to find someone, even in China, able to develop and launch 22 models with a EUR 4 billion R&D and CapEx budget per year.
So there is no reason why the favorable product life cycle that we will experience the next three to four years would not lift us to new heights in terms of financial, but also in terms of market performance. On top of that, we were even able to unlock. Jean-Dominique will allow me this thing, a slightly baroque, but certainly ineffective, at least in the last years, alliance architecture with Nissan and Mitsubishi. And now we can give it a new start, creating value together and proving that chapter two is simply just a much better setup. But the most important thing we did was, in fact, something else, in my opinion.
It is the fact that three years ago, we had the courage to see the crisis as an opportunity to position Renault Group much ahead of the starting grid for the next Grand Prix, making it one of the companies best adapted to the new world. Automotive used to be a single sport. Tomorrow, it will be like Olympic Games. You have to learn to perform also on EV, on mobility services, on circular economy, on top of being good, of course, at the traditional disciplines. And for three years, for three years, ladies and gentlemen, we have been training, we have been creating the conditions and building the bricks, allowing us to perform on any relevant field for the future. We've also been opening up to strategic partnerships with the best in their respective sectors.
In this new world, scale and synergies will remain, of course, a necessary condition, but they won't be sufficient anymore. In a very volatile environment where technology is not mature and remains evolutionary, those who stay light and agile, putting their people in the position to experiment and innovate, will come faster out of the curves. From an organization point of view, we are moving from the classical OEM pyramidal structure to a more compact, agile, and innovation-oriented teams with the focus on what will matter for the future. We are designing what we call internally, the next-gen automotive company, ready to excel in each sport, to capture the incremental value across the new profit pools emerging within and around our industry. This is, in fact, what we announced last November. This is Renaulution, the third phase of the Renaulution.
We push responsibility and accountability closer to the business and to the market. We give autonomy and ensure transparency on the performance. We create focused i- entities, like Ampere, of course, Mobilize, Alpine. The Future is Neutral. We carve out Horse, while the traditional business we call Power, will mechanically grow, thanks to the work we've done on product and on cost. What is behind all of this is a fundamental reshuffle of our business model. Renault Group business today is 80% on mature segments. If we do what we have in mind, by 2030, 50% of our focus will be on activities with double-digit structural growth and double-digit profitability. Ampere is one, of course, of the key building blocks of the group Renaulution.
It's how we are going to reinvent the Renault brand and position it at the forefront of the new era of zero emission and software-defined vehicles. Ampere will design, engineer, produce, and market the EV cars of the Renault brand. It's there to ensure that Renault stays as a leader in a market that is quickly turning to EV and software, as you know. Reaching double-digit market share with double-digit profitability has been our obsession from the beginning. For that, we will be addressing the core segments in Europe with truly innovative technology. At the same time, we will leverage the heritage and the assets of the Renault Group, so we combine the best of two worlds.
Today, I am thrilled to show you how this will enable Renault Group to offer exciting and affordable products to our customers and focus on performance improvement and value creation for all our stakeholders. The Ampere name is a tribute to a famous French scientist, who 200 years ago invented the measure of electricity intensity. We actually think it makes the point, right? Ampere is truly unique. It's a separate entity, intensively and solely focused on EV and software, designed to be a leader in Europe from day one. Ampere is engineered as a growth story. There is no place on Earth where the EV market is going to grow faster than here in Europe, around 25% per year until 2030. Policy makers have made a call. Customers are already making of battery-powered cars a mainstream choice. We are beyond...
We are convinced we are beyond the point of no return. The 2035 ICE ban regulation has been set. EVs have reached a double-digit market share. Last year, it increased from 12% to 16%, which is huge, and for the very first time, more EVs than ICE models are to be launched by manufacturers in Europe. It's already a very strong sign. For sure, there might be ups and downs, but we think there will be no coming back. We're talking about a structural change, something we haven't seen for decades. Leveraging the Renault brand, Ampere is designed to address the core of the European market, the B and the C segment. This is an estimated 75% of market volume by 2030, and the Renault Group is an undisputed leader.
On the European market, one out of ten cars sold is a Renault Group car, and it's one out of six cars when you consider only the retail market. Ampere is also a story of excellence in the new tech. I would symbolically today start from software. Leveraging one of the most advanced automotive software suites, Ampere is now creating a software-defined vehicle, competing with the best players. The software-defined vehicle is like a mobile phone on wheels, with the same three onboard layers: the hardware, the operating system, and the car, in-car services. In fact, it's a game changer, and I will explain you why. The onboard solution is constantly connected to the cloud, what we call the off-board layer. It gathers all the car data and interfaces to integrate application.
So far, the current industry standard has been relying on a distributed architecture with dozen of controllers everywhere, each dedicated to a single function, like for example, braking or air conditioning. On the contrary, the bedrock of the SDV technology is a centralized electronic architecture connected to the cloud, as I said, with high calculation and connectivity capacities. On top of it, unbundled from the hardware, you have a software platform that you'll be able to constantly upgrade over the air during the entire life cycle of the car. This is revolutionary because it makes the car able to learn all the time from its users, and actually, it's getting better every single day. We built the case for the software-defined vehicle on very straightforward arguments. First, cost reduction.
One day, five high-performance computers in the SDV centralized electronic architecture will, for sure, cost less than the 80 you have today in the cars. And we also estimated that upgradeability will save us EUR 1.5 billion of development cost over the next decade. Second, an upgradeable car will have a better residual value. We put in the, in the model, you know, something like five points, but it could be actually higher. Third, with SDV, it is the first time in the history of our industry that the car makers will have the opportunity to keep the vehicle in their service and after-sale system, basically forever. This will bring at least, okay, at least, again, that's what we've modeled, 10 additional points of after-sales retention. But why not 100? The car is always connected.
All the potential incomes coming from fancy new service that maybe no one has imagined today, will only be, for us, the icing on the cake. Alongside with, the EV shift, the rise of, the SDV, technology, in our opinion, and actually even in my personal opinion, is the next big thing in automotive, and we think that Ampere has an advantage. We think that the smartphone on wheels is in reach for us because we have the people, and we have the scale to deliver it, thanks to also very unique partnership that we establish. You may not know, but software has been a priority of the Renault Group for years now. As a result, today, we have 1,800 top-notch internal software and system engineers.
They are not the last-minute patchwork of engineers coming for a project and then leaving, you know, with a yearly churn of 30%. This is a real team. Yeah, it's a real team. They have been working together for many, many years. They were the hearts of the Intel Europe for 20 years before, before we bought them, and we integrated them in 2017. And over the last six years, they also worked together closely with hardware engineers. So, you know, automotive, hardware, and software, as you know, is kind of two different worlds, two different languages, but you need teams that can speak both. And our software and car engineers have had the time to find the common language, learning to collaborate and combine the best of tech and automotive. Today, these people represent 50% of the total engineering workforces of Ampere.
We have built that step-by-step, so Ampere was actually not forced to start from scratch. And with the OpenR Link, if you want a proof point, we have already proved our technical capability in our cars. It offers one of the best user experience and user interface on the market. I'm not saying that. This is, you know, the market and the magazines. It's available on the Mégane E-Tech, and it will be available, of course, in the Scenic E-Tech. We have developed that in-house with Google, demonstrating our ability to deliver outstanding software solution together with them. So let's take a look at it. So now in Ampere, it's time to move one step further for all the functions of the car through this SDV project. We're teaming up with the best, Qualcomm, Google.
Qualcomm is exploring the possibility of developing a digital chassis based on their latest and future Snapdragon technology to be sold one day to other OEMs. That's why they have decided to be shareholder of Ampere, so our success is their success, even beyond Ampere. When it comes to Google, actually, they contemplate repeating in the car industry what they did in the mobile industry with the Android mobile coupe, okay? So 80% of the phones have Android system. And with Ampere, for the first, very first time, Google is moving beyond the cockpit, potentially setting a dominant standard in the automotive industry. And these are partnerships that go much further than mere commercial relationships. We are the first in the industry to go so open. We strike the right balance, neither doing everything by ourselves nor delegating completely.
We develop in-house, and in the end, we are the owners of the solution, of the IP, of the car data that are hosted in Europe. So when you align an experienced hardware integrator like Renault, the chief specialist of the Android world, that is Qualcomm, and the Google Cloud, and Android known for being the most adapted to also AI algorithms. I think that, there's less chance that you completely go wrong. This is our opinion. That was what our think in the beginning. So let's now watch what Qualcomm CEO, Cristiano Amon, and then, a short video illustrating our cooperation.
Hello, Luca. It's an honor to be joining you in the inaugural Ampere Capital Market Day and be a part of your story of tech excellence and innovation. We share with Ampere a deep understanding that the future of automotive is the software-defined vehicle. Powered by a scalable and upgradable cloud-connected platform, vehicles will become dynamically configurable, allowing consumers to access new functionality through over-the-air updates and on-demand services. This will extend the relationship automakers have with their customers beyond the time of purchase, and revenue opportunities will continue throughout the vehicle's life cycle. We're thrilled to be working with Ampere to make the software-defined vehicle a reality. Ampere have unique in-house expertise, our technology teams speak the same language, and we have been working together successfully for a long time.
Most recently, we're pleased that Ampere saw value in our Snapdragon Digital Chassis, our comprehensive set of cloud-connected automotive platforms for telematics and connectivity, digital cockpit, and driver assistance and autonomy, and embedded our digital cockpit and infotainment solutions in the Mégane E-Tech. Throughout our history of collaboration, we have remained aligned on the importance of a horizontal and open approach to accelerate the pace of innovation and deliver next-generation experiences. Now, together with Ampere, we look forward to developing a state-of-the-art software-defined platform using Snapdragon Digital Chassis solutions. Ampere and Qualcomm will both contribute their technologies and resources to this long-term collaboration. Additionally, Qualcomm intends to invest in Ampere. I'm excited to see these vehicles in 2026.
This collaboration would represent a significant opportunity, not just for our two companies, but a significant benefit for the entire ecosystem, as it could be offered to other automakers, including Ampere and its partners, and Qualcomm and our OEM partners. Thank you, Luca, for the opportunity to join you today, and enjoy the rest of the event.
I haven't seen the video, but, you know, Cristiano looks like, really like a tech guru with this long beard. So adopting a horizontal approach and open approach makes the SDV of Ampere a truly unique feature. It saves us time and money, and I think it also reduces execution risk. It will. This approach and that kind of collaboration will reduce development time by 50%. This puts our development cost on the lower end of the budget amongst our peers, on par with the Chinese, and up to 2x cheaper than the Western OEM. Another benefit is that we'll be in the market in 2026, quickly catching up with Tesla, where Tesla will be at that time, and being on par in time with the most advanced Chinese OEMs.
There is one key reason explaining the huge potential of developing an open SDV. If you do your own system, you might have a few thousand engineers capable of programming. If you rely on a standard but closed system, then you might have some ten thousands. But if you do it on Android, if you do it on Android, then almost 6 million software engineers around the world might come up with the ideas and code them directly in the system, and that's what we do. The result is that we'll benefit from the overflow of application developed everywhere with no delay. So we won't be missing the next hit in the Google Store or the next Waze release, for instance. It will be right away in the Ampere cars. And finally, don't underestimate the cultural aspects of software usage. Take what happened in the mobile phone sector.
It was not only a story of better access to semiconductor technology or cybersecurity, it was also a cultural story about functionalities, economics, and services, in particular, versus Chinese OEMs. The content of our SDV is based on the European customer needs, and we know that Europeans, for example, will value more upgrade, upgradability, and connectivity. That's why also we are not investing massively in autonomous driving technology. Instead, we'll target Level 2+ with an open option of Level 3 embedded if it comes. We see actually the risk of being front runner in this field. We also believe that the strive of all suppliers to Level 4 and to Level 5 will create functionality, enhancing safety and comfort, and this is where exactly we're gonna focus. But at least we made clear choices.
Ampere, as I said at the beginning, is there to democratize EV in Europe with cars that people can afford. Today, on the core of the European market, the average price of a nice vehicle is EUR 30,000, against EUR 45,000 for an EV. Our ambition is to close the gap, reaching EV and ICE price parity before our competitors, and this is why also we are doing Ampere. Of course, affordability starts with reducing costs, and we are not starting from scratch. We already benefit from two world-class EV-native platforms: the AmpR Small, this one, for B-segment cars, and the AmpR Medium for C-segment cars. Not long ago, going for an EV-native platform was a bold choice that I think we made. Many competitors decided to sit on the fence with multi-energy platforms. Now, it's clear that we did the right move.
When you see that 75% of the top 10 EV sales in Europe are based on fully native EV platform. Our two platforms are fit for purpose, providing the right content for the right segment with absolutely no compromise. With these two platforms, we developed a family program which makes each additional car more profitable. Having best-in-class EV platform, I think, is not enough, and we are ready to go, in fact, much, much further. Ampere has a clear roadmap to progressively reduce vehicle cost by 40% between now and 2027, 2028, on the same comparable product. Our true north to achieve this ambition is a holistic approach of the EV system with no taboos. We question every single element from battery, e-powertrain, to platform, upper body, to manufacturing productivity, to car efficiency.
Sometimes, car engineering has been cursed by silos, specialists fighting in their own corridors to achieve their specific KPI, at the expenses maybe of the cost, efficiency of the whole system. Ampere's organization is designed to break with that. This cost reduction has already started, and we see positive impacts on our upcoming launches and on the life cycles of our vehicles. Tech optimization, combined with volume and economy of scale, are starting to pay off. Just take the upcoming Renault 5. For its next-generation battery, we reduced complexity from 12 to four models, for example, and we'll need over 20% less parts for the future Renault 5 compared to the Mégane. All this will allow us to improve the price positioning of our cars. It's at the heart of Ampere's strategy. We want to reduce our cost to reduce our prices.
The faster we decrease our cost, the faster we will decrease our prices, the more we will increase our margins. For example, we revealed Scenic in September. It will start at around EUR 40,000, which is significantly below competitors such as Model Y, Tesla Model Y or the BYD Atto 3, and the VW ID.4. Then, by 2027, 2028, Mégane and Scenic's successor will deliver the final blow, reaching price parity with the ICE vehicle. On the B-segment side, things will move even faster. In 2024, Ampere will disrupt the EV market with the price of the iconic Renault 5 starting at EUR 25,000, matching what many European customers are paying for hybrid cars today. And pure-player competitors are lagging behind. They have so far zero or very limited offer in the B-segment in Europe.
Our intention is for sure to keep our positioning, thanks to an exciting and competitive product portfolio. Six cars, capitalizing on what we have been always good at being good at doing, to embark our clients on the EV and software journey. I remind you that we have sold more than 650,000 EVs at the group level so far. We were the number one in Europe for many, many years. Our upcoming EV lineup shows clear differentiators, and we focus on what matters more for the European customer. This is price, I already told you, range, design, and connectivity. Now, allow me a few minutes to present you the product portfolio. With the Mégane, I think we didn't start with the easiest car. Yes, it is an outstanding product, showcasing our EV and software technology.
It shows what Ampere can deliver on software, but it's a hot hatch, positioned on a niche segment, not true a family car, due to its compact size and package, and most importantly, it's still expensive. Despite that, Mégane is doing more than 2% of the EV market in Europe, and it's a conquest car for us. In fact, over 50% in Europe and 60% in France are new customer to Renault. And it makes also people come back to the Renault brand, so it's a kind of a reconquest machine with a rate of around 40%. So Mégane is paving the way for future success, we think. Same platform, same family, Scenic, the blue one, is more on the core demands. We developed the product with two ideas in mind.
First, was about offering to the mainstream European families an all-arounder EV, able to become the first car in the household, revamping the idea of the voiture à vivre. Scenic has the right content, including software. It has best-in-class range, up to over 625 km. You can, for example, travel from Paris to Amsterdam without recharging. Scenic total cost of ownership is already at par with hybrid cars of the same category. It's competitive, with an entry price of EUR 40,000, and it offers the best ratio, exterior dimension, interior roominess, in line with the Scenic original DNA. We also wanted this car to, and this is the second idea, to be the materialization of our ESG in flesh and bones, or I should say, in metal and plastic. It is a car born with a purpose.
95% of its materials, including the battery, are recyclable. Up to 24% of the vehicle, materials are already built with recycled materials. These kind of things increasingly matter, especially for fleet customer. No other car on the market combines such lightweight with so many feature and so much range. Less than 2 tons for more than 600 km, and for the first time, Scenic features a package of technologies that we call the Safety Coach, potentially avoiding 70% of accident causes in real usage. It was revealed a few weeks ago, and it will be hitting the showrooms by the beginning of next year. Our idea is in the first product cycle, is also to revive a series of, legendary names, that made the success and reputation of this company.
We are going to reinvent them, thanks to the latest hardware and software techno. This is a chance to immediately reconnect with people, good memories, provoking a sort of an emotional shortcut, accompanying them into the future. Take Renault 5 and Renault 4. When you have sold almost 40 million units of those two cars over the last six decades, you have the possibility to easily awake people's emotion and memories. These two products will not only be magic for their look and heritage, but also for their performance. And finally, Renault 5 and Renault 4 show how Renault leverages software and chips to transform cars into intelligent and learning connected products. Humanizing technology is our credo at Renault.
We will prove it like nobody else in the market, and we will be starting from our, let's say, most popular and accessible products. So let's be clear, Renault 5 is the car that everybody wants because it's a legend that inspires all generation, and everyone is looking forward to it. The reaction of the media and social media is a perfect proof of the potential of the thing. Renault 5 has already generated around EUR 80 million in PR value since the launch in the beginning in 2021.
On top of a design able to project this icon into the future, Renault 5 will offer up to 400 km range, and on the tech side, it will feature our avatar, new avatar, that we call Reno, that is packed with AI to make the user's life easier, easier, and I will tell you about in a few minutes. The final car will be revealed in February at the Geneva Motor Show. I already, of course, test drove it, and I can't wait to open our pre-orders. So when it comes to the Renault 4, as is its ancestor, it's going to be a car with top versatility. It is an icon fit for all usage, the reinterpretation of a universal car, but for the electric era, and we capitalize on the winning ingredients of the Renault 5, such as the AmpR Small platform and the infotainment.
With Renault 5 and Renault 4, we create what I like to call instant classics. It is a very powerful strategy, and I personally know it by experience. Just those four nameplates I mentioned before have already been sold over 30 million times in the last 60 years. Now, let me show you a quick movie so we can virtually recap. So I told you about Ampere projecting Renault cars into the future, but Ampere as a concept, it's even more compelling than that. Ampere is designed to be a technological manufacturing and business platform, serving also other brands than Renault. Ampere will provide software solutions for the entire Renault Group. The flexibility of the manufacturing lines, the modularity of the two platform, and the competitiveness of the operation have already convinced Alpine to build two models on the same lines.
Ampere will also support Dacia electrification, and Nissan has joined the club to produce its Micra. On top of that, I can confirm that Mitsubishi will produce a C-SUV EV for the world on the AmpR Medium platform, of course, anyway, and of course, all electric. This is, in our opinion, only the beginning. I don't want to leave you without mentioning another ace that we have in our pocket. In fact, this is not just an additional product, it's a real and clever solution for many of the, sometimes, I have to say, conflicting demands coming to the industry from different stakeholders, from customers to public authorities. I am announcing the Future Twingo. This is a new silver bullet for sustainable mobility in urban environment.
Thanks to its best-in-class efficiency and fit-for-purpose battery, Twingo will consume far less materials, 50% less, compared to an average C-SUV. This is our response to decarbonization, air quality issues, electric mobility affordability, the reindustrialization of Europe, the creation of a European supply chain, and all of that in one product. Ladies and gentlemen, the Future Twingo. Everybody loves this car at Renault. It comes from the guts. This will be a game changer once again, like, it was 30 years ago. This is a fit-for-purpose urban vehicle, state-of-the-art EV, with no compromise. We target best-in-class efficiency with only 10 kW, 100 km. Over its entire life cycle, the future Twingo will emit 75% less CO2 than the average car sold in Europe in 2023, and of course, with zero tailpipe CO2 emissions.
It will also occupy 20% less space than the average European car, and it will be truly affordable, with a price tag below EUR 20,000 without subsidies, less than EUR 100 a month for our clients. Don't ask if we can do it. We have already done it with the Dacia Spring, but this time it will be done in Europe. We will develop it, now, Gilles, in the record time of two years, from concept freeze to start of production, matching the speed of the Chinese OEMs, right? This is a strong, clever, inclusive counterproposal of the European industry to the challenges of sustainable mobility. We are confident that in its potential to be a real game changer because we know we have a great track record with this kind of projects.
And last but not least, we have ongoing discussions with OEM partners to share the development cost. I say that Ampere is about democratizing EV. For that, it also goes beyond the product, in fact. The first wave of buyers, the early adopters, has in fact passed. Now comes the second wave, people with other expectation to move to EV. They actually need the trust, and they need the peace of mind. That's what we see in the research. Ampere, unlike pure players or newcomers, owns all the ingredients to offer that from day one. We don't need to invest massively, neither in time or in cash, and this makes a big, big difference with the pure players. First, the brand. Ampere benefits from Renault 98% brand awareness in Europe. Everyone knows us here.
This creates trust because people know where they set the foot, and it puts us at least half of the time on the shopping list. The mainstream customers also want to buy, and I want to underline that, want to buy in dealership. 70% of them, according to our research, want to do that, against only 30% amongst the early adopters. That's where the Renault Group network in Europe takes the stage with its 4,700 dealership and 8,000 service points. We have 30,000 EV-trained people ready to support our clients. This is something that no fancy website can replace, and of course, it will also be possible to find, to book, and to buy your car online. People also need to be reassured after getting their car.
For that, too, Ampere benefits from the assets, proximity, and experience of Renault Group after sales and its dealer network. So we have a very strong today, a very strong customer satisfaction. It's already recognized with an eReputation score of 4.8 stars in the Google star rating in Europe. We are doing actually better than competition. Customers also expect to get access to charging points whenever they need, at the best price, with green solutions, and they want to charge at home and control their electricity bill. For that, too, Ampere, its, and its partner offer a full range of solutions. With Mobilize Beyond Automotive, we already have an all-in-one wall box solution, allowing to peacefully charge at home or at the office. We also optimize people bills, thanks to Mobilize Smart Charge.
It chooses the right moment of the day or of the night to charge the car. From 2024 onward, Ampere car, that means from the Renault 5, Ampere cars will be equipped with the vehicle-to-grid technology. It allows us, them to reinject, as you know, the electricity stored in the battery into the grid when it's appropriate, empowering our customer to reduce, electricity bill up to 50%, for example, in France, and this is our ambition. For charging away from home, Mobilize Charge Pass is already giving access to more than 500,000 charging points in Europe. And we go further, soon locating around 200 fast-charging stations within five minutes drive from highway exits. So when it comes to addressing new ways of owning a car, Ampere is uniquely, also there, uniquely positioned, thanks to our investment-grade captive finance arm.
This is Mobilize Financial Services. It is recognized as one of the best in the industry. It offers solutions ranging from simple subscription for a few days to full leasing for years. This is a very powerful asset that allows us to reach 82% financing penetration rate for Mégane on the retail sales. This is 22 points above ICE and hybrid vehicles. Finally, Ampere is equipped to maximize the life cycle value of its cars. Until now, the vast majority of our revenues was generated when selling the car, or the associated, let's say, products like finance, maintenance, and insurance. Our new business approach breaks with that. We are going to continuously increase the share of the revenues generated after the first sales of the car. There are many revenue streams that Ampere could capture on top of what we sell today.
So let me sum it up quickly. Finance solution over the life cycle of the car, charging services, connected services. Unlike some competitors, we are not over-promising. Those additional revenues and profits are mainly an upside to our business model, as Thierry will explain later. Now, I would like to explain to you how Ampere operating model has been tailor-made to compete in what we recognize as being a completely new sport or discipline, with rules of the game that are different from the ICE. 70% of the cost of the materials in an electric car are linked to EV components. You need two times more semiconductors than in an ICE cars. The raw materials are different. The number of parts is at least 30% lower than in an ICE car. Vast majority of the new functionalities of the product will come from software.
And finally, an EV will require less, less maintenance than an ICE, and on the other hand, new business opportunities are emerging from connected cars and energy ecosystem. We are talking about a completely different value chain and also a different business model. So hitting world records in this new sport requires different talents, different training, and a different measurement of the performance. We designed from scratch a completely new organization, entirely focused on EV and software without compromise. Ampere is about 11,000 people out of the 106,000 working in the group. From day one, this team will focus on activities serving its purpose and only in the high value-adding activities. Ampere will have 35% of engineers in its workforces, and half of them will be specialized in software.
This is about twice the proportion of engineers that you can find normally in the auto industry, I would say, on average. This makes us more similar to a tech company than to a classical OEM. As a tech organization, software engineering is separated from hardware engineering. This will enable the decoupling of software and hardware, I would say, development cycles. This team has the power to deliver while operating with the same agility and speed as the pure players or startups with a flat and efficient structure. The ambition was to get two management layers less compared to Renault Group, increasing the accountability and the speed. 95% of the employees will be in operation, so with very lean support functions. With EUR 25 billion of turnover by 2031 for Ampere, each employee will generate around EUR 2.5 million of business.
This is five times more than today at Renault and 3x more than the leading pure EV benchmark that we know today. This Ampere team will keep, I would say, inclusion and diversity as a key value. Ampere is playing for a fair automotive transition, making sure that 100% of the workforces is upskilled and reskilled from day one, thanks to the now famous ReKnow University. It's one of the biggest reskilling projects in Europe on topics like batteries, data, cybersecurity, and circular economy. Ampere also has outreach programs for talents from underprivileged backgrounds. We have an agreement to hire, I think, 300 minimum income beneficiaries in 2023 and 2024, and we will continue to push gender diversity and equality.
So, for example, we will reduce gender pay gap to zero from day one, just to make a few simple examples. So the Ampere leadership team will gather these very important people, will gather outstanding talents from both Renault Group and global tech champions, or international automotive companies. Our team will be given full autonomy, and they will be fully accountable for Ampere. I think there is a quick video presentation. Thank you. Thank you for them. Thank you for the applause for the team. So the Ampere organization is also the place where we establish a modern technology and data-driven governance model.
We're talking about core IT platforms encompassing all key corporate process and dimensions, from product development with Dassault Systèmes 3DEXPERIENCE, to industry with the digital twin that we developed together with Google, to the end-to-end supply chain systems with the unique set of technology that we developed leveraging Google Cloud technology. To sales and after sales, with Tekion, to finance with the development of the new SAP S/4HANA system. This is going to break silos, homogenize data, foster transparency, speed, and collaboration, and we will not stop here. Ampere is an AI-native organization. We have a dedicated AI team at the first level of the management. It's led by a worldwide, pretty famous expert, Luc Julia. In the last years, we have come up with a breakthrough in what is actually the bedrock of any AI application. This is data.
Today, we collect over 1 billion data every day from all industrial sites and operations. Everybody speaks about AI as a buzzword, but let me give you a few true example things that are happening at Renault. On logistics, we have developed tools to efficiently fill our trucks. It enables us to use 8,000 less trucks, avoiding 21,000 tons of CO2, and we also have tools to optimize the routes of the truck drivers. We are innovating on the production side. For example, predictive maintenance brings a critical support to the competitiveness of our plant. On vehicle distribution, predictive AI is a game changer when it comes to deliver data reliability. It brings improvements in terms of customer relationship management, in terms of customer satisfaction, and supply management.
Finally, you will soon witness the artificial intelligence in our cars with Reno, the Renault Avatar, from the launch of the Renault 5. This is the incarnation of what you call humanized technology. Reno will evolve over time, customized for every situation. We are creating, in fact, you know, more than Ampere, the leading EV and software, automotive ecosystem beyond the Ampere perimeter. Ampere, of course, it's a fully-fledged OEM operating at scale, but it's also a catalyst for the entire EV industry. Let's now talk about how this galaxy works. First of all, it includes different elements of the EV value chain, from raw material sourcing to assembly. Ampere's unique ecosystem approach is designed to cover all of it very efficiently, focus on what matters.
Partnering with the most relevant players allows us to optimize our investment, smartly allocating capital, acquire data competencies, de-risk our approach, and get the strategic agility that is needed when you are in a very volatile technological environmdaent. This approach, from what you see from the numbers, actually pays off. Already, Ampere benefits from one of the most complete EV value chain coverage in the industry, and we invested nothing compared with the tenth of billion spent by competitors who built, for example, their own gigafactories. For raw materials, we are securing sourcing that through direct purchasing, and we also buying directly from our long-term battery supplier. We have already secured a significant part of our key commodity needs from four partners, from Managem to cobalt, to Terrafame on nickel, and Vulcan, and more recently, Arverne on lithium.
For the batteries, we chose not to invest EUR billions, as I said before, directly in giga factories. We rely on best-in-class and diversified partnership, from big corporation to startups. So we have over 15 years of commercial partnership with LG. This is something we're very proud of, and, we too are, I think, very special for them because, it's with us and with General Motors that, LG entered the automotive sector. So reinforcing this cooperation will ensure us stable and competitive battery sourcing. We have also chosen two additional main strategic partners whose battery factories will be, in France, next door to our assembly lines. You have first Envision AESC. This is a global player in battery technology and factories, building its own gigafactory in Douai.
It will have a capacity of 9 GWh in 2024, and we aim at reaching 24 GWh in 2030. And there, the objective is to produce state-of-the-art, low-carbon, cost-competitive batteries for the Renault 5 and the Renault 4. We also partner with Verkor. This is a French startup specializing in battery cell development. We have acquired an initial stake of 20% in 2021, and we have just taken part in a successful Series C, contributing to a EUR 2 billion fundraising. So Verkor's future gigafactory is in Dunkirk, not far away, will supply the equivalent of 12 GWh of batteries per year to power the higher-segment vehicles of the Renault Group brands.
And last but not least, Ampere is a joint venture in Ruitz, this is our plant, with Minth, allowing us to develop and produce our battery casing in ElectriCity. The e-powertrain is another key link of the EV value chain, with tie-ups, let's say, with complementary partners, like, such as, for example, Valeo, with Wieland, with Vitesco, with STMicroelectronics, to deliver an ultra-efficient e-powertrain, developed at 70% in-house, and it will be in the market in 2027. We went for the so-called electrically excited synchronous motors technology, not only because of its efficiency, but also because it offers independence from rare earth supply. So Renault has been pioneering this technology, and this technology has recently been embraced by the likes of great brands like BMW. So the center of the Ampere Galaxy is its manufacturing heart.
That’s ElectriCity. It includes four production sites, two assembly plants, Douai and Maubeuge. They produce our Ampere lineup and several models for other brands: Alpine, Nissan, Mitsubishi. Douai is already a full EV plant, and Maubeuge will be converted to full EV plant by, at the maximum, the end of this decade. The Ruitz plant will produce the battery casing, and finally, we are converting Cléon into one of the biggest and most competitive European e-motor production sites. All these investments are already running or ready to go. We are already one of the European major EV production poles, with a capacity of 400,000 units, ramping up to 620,000 within three years, without further investment. And we have a roadmap allowing Ampere to reach 1 million vehicles by 2031.
We are shooting for our ecosystem to be as competitive as Eastern Europe plants by 2025, at least. We will assemble a car in less than 10 hours. For Renault 5, it will be nine hours below a worldwide very well-known leader. And Ampere benefits from an ideal logistic ecosystem. As of today, 75% of our suppliers are less than 300 km away from the plant. It reduces logistic costs by 40%, and within a radius of 1,000 km, we have roughly 75% of the European EV market with the customers. ElectriCity carbon footprint will be net zero by 2025. First, by 2026, we will reduce our energy consumption by 40%. To achieve that, we have compacted our plants, reducing energy needs, and we optimize energy management, thanks to 4.0 manufacturing system and digital tools I mentioned before.
On top of consumption reductions, we go for fully sustainable energy. Ampere benefits from a good starting point with the, I would say, the French electricity carbon footprint being among the lowest in the world, behind only Norway and Sweden, and we move further. We will cover all our electricity needs through renewable energy, thanks to the largest green electricity supply contract in France with Voltalia, using solar panels. When it comes to the heat, we will rely on partnership for low-carbon supply, including biogas. By 2025, ElectriCity will have reduced by 90%, nine zero, its CO2 emissions. The Ampere Galaxy is also about our partners of suppliers. We streamlined it, reducing the number of suppliers by around 40%, from 400 for the Mégane to 250 for the next-generation C-EV, for example.
In the traditional world, we relied on a classic customer to supplier relationship. Now, at Ampere, we will engage in long-term and more strategic relationship. We seek cooperation to co-invest, to co-develop, and of course, also to share the risk. We also make sure this ecosystem complies with the best of the standards in terms of human rights, transparency, and ethics. Ampere is in full control for making its panel. ESG selection criteria are mandatory for its suppliers. Ampere partners with the best auditing and mitigating actors only. In addition, it will have a transparent and traceable value chain from mine to cell by 2025. Ampere supply chain is responsible and sustainable by design.
So being part of a planetary system also makes Ampere more resilient and robust because it can leverage all the assets and initiatives of the Renault Group. For example, there's Mobilize, which I already touched upon, for leasing, subscription, payments, insurance, charging solution, battery second life offering, but also The Future is Neutral is important, is another example. This is the Renault Group company dedicated to circular economy that is actually taking off right now. Ampere will benefit from the activities of Neutral and its partners on closed-loop recycling for battery and e-motors production scrap, and for end-of-life vehicles. Neutral also gives a head start to Ampere to anticipate the circular economy regulations. The battery directive will impose fixed percentages of recycled minerals within batteries by 2031, and we are ready.
is Neutral, Mobilize, and Renault Group after-sales give also a head start to Ampere when it comes to battery full lifecycle management. For battery repairability, we have a network of 20 battery repair centers and an overall capacity with 8,000 batteries per year in Europe. For battery second life repurposing, we have the track record on Mobilize, and for battery recycling, we have 12 years of experience and a set up to, let's say, 100% traceable, responsible, and eco-friendly sourcing of recycled cobalt, nickel, lithium at a very competitive price. All these business streams have not been factored in the proposal that Thierry will describe later. I want to be very clear. So how much money and how much time would be necessary to activate all of this for the newcomers? EUR billions, years, decades, I guess, but Ampere has it, and right now.
If you put it all together, you see that being part of that galaxy gives Ampere a strong advantage compared to any newcomer in time and in money. Building Renault brand's 90% awareness from scratch, according to our estimation, would require at least EUR 5 billion in communication investment. Setting up a network with the same capillarity as the Renault Group has would probably require EUR 3 billion. And to have the procurement and the investment that we already incurred, you probably need another EUR 7 billion. So we're talking about EUR 15 billion and many years of ramp up. This is a very nice gift for a newborn, and as you can see, Ampere is a project with a lot of substance, and the beauty of the thing is that we know how to make that all work together.
This is what Thierry is going to tell you right now. Thierry, my dear CFO, the floor is yours.
Well, thanks very much, Luca, and good afternoon to all of you. To illustrate everything that we've talked about so far now in a very simple fashion, let me walk you through the typical life cycle of a vehicle to show you how the Ampere and Renault Group operating model is gonna work. First of all, Ampere is going to plan and decide its vehicle lineup, including the design. It's in charge of developing all the BEV and software-related components. For the development of non-BEV specific components, for example, a seat or a mirror, Ampere will use solutions across Renault Group. With the help of Renault Group, with its scale and its purchasing power, Ampere sources the materials. It then produces the vehicles in Cléon and in the ElectriCity plants that Luca just described.
Once the vehicle has been produced, Ampere benefits from the extensive retail network of Renault Group for sales and distribution. During their afterlife, during their actual life cycle, Ampere's vehicles are serviced by Renault's after-sales network, while Mobilize offers financing options and seamless charging experience to Ampere customers. At the end of the life of the vehicle, The Future is Neutral steps in for battery and raw material repurposing, as well as vehicle refurbishment. As you can see, these are focused and symbiotic relationships organized to attain the best for both sides. But make no mistake, Ampere is in control of its costs. More than 90% of the vehicle costs are decided and incurred directly by Ampere from its external suppliers or in the shape of labor costs.
We're talking about a complementary operational model that translates into mutual flows over a broad scope of functions and activities. So it's a lot of relationships. To secure these relationships, contracts have been negotiated between Renault Group and Ampere, respectively, respecting clear guiding principles. Number one, ensuring business continuity. Number two, setting up the Ampere and Renault Group relationships on an arm's length basis with clear accountability and autonomy principles at heart. Number three, encouraging both parties to strive for competitiveness, thanks to clear performance metrics and objectives, and flexible, simple contractual structures. Number four, defining clear governance and escalation processes to solve any potential conflicts of interest.
To be very specific, these relationships have been clearly defined in 20 contracts, grouped in 4 broad categories: product and supply agreements, specific services agreements to cover R&D developments, for example, sales and marketing agreements, and general services agreements that cover things like IT and like finance, et cetera. Over the last months, each one of these contracts has been subject to a strong negotiation and validation process involving Ampere and Renault Group representatives to ensure that both parties' interests are fully respected. The overall process was facilitated by an external party. Overall, we've organized our relationships in a clear and efficient way to make this operating model work from day one. Switching gears a little bit, let's talk about ESG again. ESG for Ampere is more than an aspiration. It's there by design. It's embedded in everything that Ampere does.
In the past minutes, Luca has, in many occasions, touched on some of the aspects of the ESG strategy, so I'm just going to try to wrap it up for you and give you a bird's-eye view. Ampere's ESG purpose is very clear, and it rests on three pillars. First, we expand the decarbonization beyond electrification to be a net zero company by 2035. Second, we work to preserve natural resources, putting the circular economy at the heart of our business model. We implement closed-loop recycling of key materials and are uniquely committed to full battery life cycle management. Last but not least, as mentioned by Luca, Ampere positions itself as a leader of the fair automotive transition. Our supply chain abides by the highest standards in terms of human rights and transparency, and ours is an ethical and inclusive workplace.
Let's focus for a minute on the first pillar and see how Ampere, as a whole, will become a net zero company by 2035. We'll achieve our ambitions by deploying our decarbonization efforts following a cradle-to-grave approach. First, Ampere obviously benefits from its full EV lineup with zero tailpipe emissions. Second, as mentioned, we will be net zero on the industrial scope by 2025. Thirdly, we'll also benefit from the decarbonization of the electricity used for vehicle charging. When it comes to Ampere's suppliers' carbon footprint, thanks to our European-centric supply chain, we have a great starting point. Altogether, sourcing and assembling an Ampere car emits up to 40% less CO2 than our pure-player competitors. And we're going to go further.
We'll reduce our vehicle supply chain carbon footprint by 30% per kilo of materials purchased in 2030 versus 2019, by focusing on the six most contributive materials, such as aluminum, steel, and polymers. Beyond the car, the battery remains the biggest decarbonization challenge for an EV. We'll decarbonize our batteries by 35% in 2030 versus 2019, thanks to two levers. On one hand, the decarbonization of the energy required for battery production with our two gigafactories in France. On the other hand, low-carbon raw materials sourcing through our partnerships with the mineral suppliers that we already mentioned. All this and more will lead us to reduce our 2019 baseline by 90% in 2035, reaching our objective of being a net zero company with single-digit compensation.
I told you that Ampere is an ESG native story, but we're not the only ones to be convinced of that. One of the most recognized rating agencies, Sustainalytics, performed an ESG rating of Ampere, and they came up with the same conclusion. We're rated number one in the automotive industry with a score of 12.8, more than four points better than our closest peers, including pure EV players. Even outside of the automotive industry, we're in the top, we're a top ESG performer. Globally, we're placed in the sixth percentile of all the industrial companies assessed by Sustainalytics. This unique ESG DNA will be nurtured by a transparent and reliable governance. Ampere's governance will be ensured by a dedicated board of directors.
It will meet the highest standards of independence, with at least a third of independent directors, in application of the AFEP-MEDEF Code, appointed for their expertise in tech, in automotive, and in business. The board will include three dedicated committees that will support Ampere in the three fields that are key for its success: strategy and sustainability, audit and risk, and nominations and compensation. Ampere's board will be lean, with 11 members, including the chairman, to ensure the speed of decision and agility required to meet its business model. The board will include six Renault Group Directors, including Luca as the Chairman, four Independent Directors, and 1 Nissan Director. From the onset, it will display benchmark diversity metrics. Making Ampere successful also means giving it the level of independence that it needs. I want to be clear, Ampere is not just a business unit of Renault Group.
It's a 100% corporation in its own right, fully focused on performance. You'll have the full visibility on this performance with all the level of transparency required for a listed company, and I'll come back to that. The autonomy required will translate into specific independent decision-making processes in Ampere, following standard delegation of authority levels in all key areas that are critical for Ampere's performance and development. It's now time to see how Ampere materializes in numbers. So what does this all mean financially? What we're doing is building a pure EV player that's designed from day one to deliver an industry benchmark level of financial performance with the reliability of an established OEM. It's the best of both worlds.
Ampere targets 10% operating profit from 2030 and onwards, with a clear milestone to reach its breakeven point, profit and cash-wise, not in a decade, but in 2025, two years from now. Let's have a look at the path to the 2025 figures. As a first step, volume will be the main driver as we go from one model in 2023 to four, while improving price competitiveness. In parallel, we'll keep improving distribution costs, thanks to our upcoming lineup as Scenic, Renault 5, and Renault 4 will require less incentive than Mégane's already low base today. We'll also see the early impacts of our efforts on COGS reduction, but more to that, more to come on that later. Finally, 2025 will be a step year in terms of severity of CAFE requirements.
This will give more value to the CAFE credits generated by Ampere for the rest of the Renault Group. From our breakeven point in 2025, we have a clear path to reach double-digit operating margin by 2030. The dynamic is the same, but the importance of each lever is different. We'll rely less on volume, and a greater portion of the profit increase will be achieved, thanks to our vehicle cost reduction program. Let's have a look at each brick in our profitability bridge. First of all, Ampere is a reliable growth story. A promising lineup of seven vehicles will enable it to target 1 million units in 2031. Focused on the fastest-growing EV markets in the world, Ampere will deliver a first-generation lineup consisting of four cars: Mégane, Scenic, and the iconic Renault 5 and Renault 4 by 2025.
In 2026, Twingo will arrive. Then, Ampere will enlarge its lineup to reach a level of seven vehicles, as mentioned earlier. Renault 5, Renault 4, Twingo, by then, the replacements of Mégane and of Scenic, and two additional vehicles. Also, do not forget that Ampere will benefit from one of the largest existing customer bases in Europe. There are today over 30 million Renault cars on the road in Europe today, and this is compounded by a strong loyalty rate of around 60%. This creates a huge natural pool of future customers for Ampere. Translated into revenues, our first-generation lineup of four vehicles will be the main driver to reach EUR 10 billion by 2025 in revenues. Vehicle sales will account for 75% of Ampere, Ampere's revenue in 2025, and 90% of revenue in 2031.
In addition to its core lineup, Ampere's revenue will include sales to partners. These will come from the development of manufacturing, the development and manufacturing of complete EV vehicles for Nissan, for Alpine, and soon for Mitsubishi. EV and software technology, sold to Renault Group and potentially external partners, and for a limited amount of time, legacy ICE components and services, as in the short term, this will help us avoid overcapacity in our plants. Sales to partners represents almost 50% of Ampere's revenue in 2023. They'll represent 20% of the revenue in 2025, and we've embedded in our business case 5% by the end of the decade. We've been pretty conservative.
We have only included in the figures the partnerships that are already signed, but we have a strong opportunity to grow the sales of software and EV components, as well as full vehicle supplies, into a significant business in the future. Ampere will also develop its after-sales business, leveraging the network of Renault Group and capitalizing on the connected cars, as mentioned earlier. After-sales revenue will be marginal at the beginning, but will increase to hundreds of millions EUR with the surge of the number of Ampere cars on the road. We consider what we call new services as the cherry on the cake, or the icing on the cake, as Luca said. This means that we're not betting on thousands of EUR of additional revenues per car, like some of our competitors have.
In fact, we estimate we can gradually grow them to 500 EUR per year and per car in operation. This will consist in apps, connectivity, and charging and energy services, for example. Of this amount, 60% will go directly to Ampere, while the remaining share will be recorded in the other entities of Renault Group involved in these services, such as Mobilize. Finally, as it produces most of the EVs of Renault Group, Ampere will generate corporate average fuel economy credits that it will sell to Renault Group and to potentially external customers at a market-based price. All in all, combined after-sales, new services and CAFE represent in our construction around 4% of Ampere revenues in 2025. As mentioned previously, EV volume growth will rely on the ability to get to price parity with ICE vehicles.
This means that we'll gradually reduce price on a like-for-like model. However, this does not mean that Ampere will deviate from the motto that has been the hallmark of Renault Group's outstanding turnaround: value over volume. The price reduction will be synchronized with our cost reduction programs to ensure that we're constantly increasing our margins. Our mix with our upcoming launches will be balanced between B and C segments. Before we get to the cost of goods sold, let's talk about distribution cost. First, Ampere will focus on the most profitable channels, as we do with very strong discipline on the Renault Group. Ampere expects its retail sales to account for more than 50% of the mix, ahead of most major mainstream OEMs.
Secondly, our Europe for Europe business model, from a manufacturing and supply chain perspective, will allow us to quickly adapt our production levels to demand with one clear goal: always produce one car less than the demand. This will ensure that we avoid having to do incentives to clear stranded inventory. Finally, we've signed specific agreements with our distribution network in Europe to ensure that distribution costs net in our network in Europe are lower than on the ICE side. From an already low base, we're working with this very strong network to continuously improve its performance and target to reduce its fixed cost by 30% at the horizon of 2030. Now, for the part that you're all waiting for, the cost of goods sold. Vehicle cost reduction is going to be a key driver to improve profitability for us. It's our daily fight.
This alone justifies running Ampere as a dedicated EV business. I've said this before, the team has never found as many ideas to lower variable cost than since we started Ampere's carve-out. Every day that goes by validates the choice that we've made. As explained by Luca, we will reduce by 40% our cost on the next-generation cars by 2027-2028. Our 40% cost reduction roadmap is clear and is already underway. We target a 50% reduction on battery, - 25% on e-powertrain, - 25% on platforms, minus 15% on upper body, and - 50% on manufacturing and supply chain costs. I'm actually going to take you through each one of these one by one. First, on battery. We'll develop fit-for-purpose chemistries along two pathways that we will apply, depending on the model, with a standardized cell footprint.
A design to cost path aims primarily at achieving the lowest possible cost per kilowatt hour, thanks to LFP, for example. A design to energy path aims at maximizing density to pack more kilowatt hours and more autonomy for a given footprint, thanks to NMC. In parallel, we'll put the battery at the center of the car, working on the energy integration with cell-to-chassis or cell-to-pack architectures with high modularity and simplicity. Our approach is not to enter the race for bigger and bigger batteries, which makes, in our view, no sense, either from an economic or from an environmental point of view. We'll reduce cost by focusing on right-sizing our batteries by up to 20%, by improving charging performance with 15%-80% charge in 15 minutes, and pushing all levers to maximize car efficiency, from aerodynamics to weight, and I'll come back to that.
As you can see, this is a continuous improvement, and the journey has already started. If you compare where we started on ZOE in terms of energy density at pack level, we've made continuous progress and see even more opportunities going forward with a target at 300 Wh/L. This is enabled in part by a simpler battery structure. For example, and I think Luca stated this already, from Mégane to Renault 5, we already reduced complexity from 12 to four modules. Car efficiency is also driven by the e-powertrain. In fact, in that respect, we aim for around 90% battery-to-wheel efficiency. This improved powertrain efficiency translates into 5 kWh or 6 kWh of savings, meaning a few hundred EUR per car.
Moreover, we'll go for an all-in-one powertrain integration with many of innovations, including, for example, brushless glued stack, leading to less parts, more capacity, and less costs. Moving to platforms, the next generation C-EV platform will be a major step for us, and it will be entirely developed by Ampere. We're determined to push the boundaries in terms of cost, but also in terms of performance and modularity by 2028. First, the number of parts will be reduced by 20%-30% on average between the current level and 2030. Second, highly modular, this platform will support batteries ranging from 50-100 kWh. Third, optimized thermal management will improve range at low temperature, as well as charging efficiency. On the upper body cost side, we will cut cost by 15%.
Since Gilles Le Borgne arrived at Renault Group, we've reduced the average number of parts in a vehicle from 2,400 on average to 1,100 on Mégane. We know how to do this and firmly intend to keep going. To illustrate this, our current roadmap aims at cutting platform and upper body variance by 40%, moving from the 1,100 parts on Mégane that I just mentioned to 700 parts in the next generation. Beyond the cost of the upper body itself, the next generation platform will achieve improved aerodynamics, which is a key lever to increase car efficiency and therefore limit battery size and cost. Obviously, we don't limit our optimization efforts to the vehicle itself. As explained before, we're reducing the number of hours to assemble a car and decreasing our logistics and energy costs.
Striving for excellence in our operations will result in significantly reducing our manufacturing and supply chain. Now, it's all about variable cost, but it's also important to keep an eye on fixed cost. We've built an organization that challenges traditional OEM setups by focusing only on the things that count: technology, software, and the EV value chain. For everything else, we'll leverage on Renault Group, giving Ampere a fixed low cost, a low fixed cost base. I'll come to manufacturing and R&D, shortly, but let's start with SG&A. Since our brand is already established, 98% awareness, our fixed marketing expense, expenses will remain very low. They will be at less than 2% of revenue from day one. For example, our customers already know Renault 5 and Renault 4 and Twingo. No need for EUR billions in advertising to build these nameplates' reputation.
G&A will start at approximately 2.5% of revenue from day one, putting us 15%-20% below the best OEM today, and at less than half some of our key competitors. Overall, because Ampere starts with a scaled-up capacity in manufacturing and can stand on the shoulders of a large OEM like Renault Group, fixed cost will remain under strong control and will be a competitive advantage. This scale and capacity effect is also very important to understand from a cash standpoint. If you take a step back, building such a profitable franchise usually takes a lot of time and effort, but also a lot of cash. But Ampere is different, and here is why. First of all, we've built our EV franchise over several years already, and as a result, the bulk of the investment is already behind us.
Ampere is on a rolling start. First, from an industrial capacity standpoint, Ampere is fully operational day one, with 400,000 units, upgradeable to 620,000 capacity in electricity. Once this capacity is fully utilized, our plan is to leverage Renault Group's other plants on a contract manufacturing basis to avoid the addition of fixed cost. Secondly, from a vehicle development perspective, 80% of the investments of the four, the first four models are behind us. Thirdly, as regards platforms, we've built the Ampere range based on families around AmpR Medium and AmpR Small. These two platforms, developed, by the way, at a cost that's no higher than an ICE equivalent, that each of these platforms will each support several cars, as Luca explained earlier. Going forward, Ampere's R&D and CapEx spend will revolve around 4 key buckets.
Roughly 30% of the spend from 2023 to 2031 will go towards software and electronic architecture, 25% towards EV and powertrain development, 25% towards platform and upper body, and the remaining 20% towards what we call cross car line. In fact, Ampere is the poster child of the open partnership approach that we champion at the group level. You've seen earlier today the software and EV value chains that we've built with our partners. This keeps us flexible, tech agile, and financially, keeps our capital requirements low. We've covered a large portion of our battery needs to support production until 2031. To do this, we've invested far less than the billions in investment in gigafactories that some of our key competitors have announced. In fact, we've invested EUR 75 million.
Without investing directly in mining facilities, we've already secured what we aim for from a raw material standpoint through our battery partners and direct partnerships. We've already discussed the savings from Google and the Qualcomm partnerships earlier. All this translates into a differentiated cash story for Ampere. On R&D and CapEx specifically, you can see on the slide how we benefit from the rolling start of Renault Group and our unique transversal approach. From around 25% of revenue in 2024, we will quickly drop and normalize to around 8% as a long-term target. The average over the 2024-2030 period is 10%. You know we can do this. From double-digit depreciation and amortization, we'll gradually come back to Renault Group levels.
By the way, Ampere's French R&D footprint will allow it to benefit from France's Crédit Impôt Recherche, which will provide tens of millions EUR of R&D funding every year. The result of all this is that Ampere will not burn billions and billions of EUR in cash for the years to come. In fact, we will start generating cash in 2025, after a maximum cash burn of EUR 1.5 billion in 2024 and the first half of 2025. We forecast then to reach about 80% cash conversion rate in 2031. To summarize, we have a clear and attractive set of financial objectives for Ampere. As previously mentioned, we'll target a 30% compound annual growth rate by 2031 to reach circa EUR 10 billion revenues in 2025 on the path to EUR 25 billion by 2031.
Profit and cash break-even will come in 2025, and 10% operating margin in 2030, with 80% cash conversion. As you can see, separating Ampere was the right call to make us successful in EV. But why list Ampere? First of all, very simply, raising capital from a potential IPO will provide resources for Ampere to grow revenue, profit, and cash faster. We anticipate using a portion of the proceeds to fund capital expenditures, R&D, and potential external investments, in particular in three key areas. The first is the strengthening of Ampere's EV and software value chain capabilities without deviating from our low capital intensity policy. The second is the acceleration of our variable cost reduction roadmap and the design and development of Ampere's second-generation C platform, which I mentioned earlier. And finally, the development of new cars.
Secondly, and more importantly, a listing is just culturally right for Ampere. It will ensure that Ampere's management is truly focused and accountable in the EV and software businesses in the way that running a business unit inside of Renault Group would not do. It will ensure a culture of transparency and a culture of focus. For our group stakeholders, raising cash at Ampere level provides the best way to accelerate its development and ultimately cash generation without pulling on group resources. In turn, this provides the best conditions to accelerate our roadmap to reward those shareholders...
We're excited about the IPO opportunity because we believe that Ampere is the only European EV and software player to offer such a unique combination of purity of purpose, ready-to-go tech, product, and manufacturing capabilities that will ensure rapid growth with a horizontal approach, and the backing of an established OEM that provides a lower-risk investment case. I take the opportunity to remind you that part of the proceeds are already secured with the investments of our first cornerstones, Nissan and Mitsubishi, investing together up to EUR 800 million in our franchise. They should also be joined shortly by Qualcomm, considering an investment. I want to be clear, though, we believe that Ampere's IPO provides an optimized path to its success. But because we're so convinced of Ampere's value, we will not do it at any price.
We're preparing ourselves for an IPO in the first half of 2024, but we'll proceed only if we're comfortable that the market will sustain the right valuation for this great franchise. As you know, Renault Group now generates more cash than it ever has in the past. This gives us ample flexibility regarding timing and market conditions. To wrap up, the listing of Ampere provides an opportunity to further accelerate the development of Ampere without drawing on Renault Group's resources, and allows Renault Group to accelerate its roadmap to reward its shareholders. The IPO will not only raise funds, but more importantly, it's a project driven by operational and cultural motivations. With that, I'll hand it back to you, Luca, for a conclusion.
Thank you. Thank you, Thierry. Don't worry, it's not going to be very long. So what we have laid out today are all very tangible objectives, and we have the right recipe, right, and ingredients to achieve them. We have the right strategy, we have the right product line up, the right setup, and the and also the know-how. One year ago, as we announced in our CMD, and as I reminded you earlier, we have started to redesign Renault Group as a next-generation OEM. After having achieved one of the fastest turnarounds in the recent history of this industry, we put this company back again at the forefront of innovation.
We have reorganized it, pushing autonomy, responsibility down to the businesses, designed around the new automotive value chains, fit to capture value where it will be, building the ecosystem with the best partners, to summarize. Actually, we design a corporate architecture to optimize return for Renault Group, our shareholders, but also the minority shareholders in some of our businesses. Each one of the businesses has the right financial proposition. Horse and Power are about cash generation and yields. Alpine is our growth story around global upper-end segments. The Future is Neutral opens sustainable and profitable growth avenues beyond cars. So does Mobilize for recurring revenue generation with high margin. And Ampere is about, as we explained, profitable growth with low execution risk. Growth, profitability, low risk, this will be the obsession of the 11,000 members of our Ampere team.
I think that together with our employees and with our new investors in Ampere, we have an opportunity to create something truly remarkable, truly great, in Europe, making EV accessible and profitable in this part of the world. Finally, I want to thank you all for your continued support. I want to thank, thank the team, and I want to thank the people that organized this event. We are, as Thierry said, incredibly excited to take the plunge with Ampere, and I'm looking forward to sharing with you our progress all the time, introducing the first and unique European pure player to the public markets. And now we have the time for the Q&A. So Thierry and I will be open to your question, but I think we need to leave a minute of room to the teams to get the setup done.
Thank you very much.
So we are happy now to start the 45 minutes Q&A session. Just to let everyone ask their questions, please, only ask one or two questions. We'll start with sign number four, George, Goldman Sachs. Please, if you can stand up, please.
George Galliers, Goldman Sachs. Thank you for the-
We know you, George.
Thank you for the presentations. Obviously, a big element of this plan and its success is down to the variable cost improvements that you outlined. On the battery side, where you're targeting a 50% reduction, can you just give us a bit of context in terms of what the starting point is? With a 50% cost reduction, do you expect to be at the levels where you perceive Tesla to be today, or at the levels where you perceive Tesla and other market leaders to be in the 2027 timeframe?
So the answer is the second one. Of course, what we're trying to do is to be extremely open, to be flexible, and find any new solution that is coming. One of the things that we clearly see in that space of battery is, you know, a strong evolution of the technology. It's not only about chemistry choices, it's everything that goes with it. It's the, you know, all the setup, the integration of the battery on the chassis, the fact that you give up, I don't know, the battery case or, you know, the, let's say, the how do you call it? Like, to, you know, the system to
Thermal management.
The thermal management, everything. So we're going for a very extreme solution, and we think we will be there when we need to be at the level of the best one in the world, right? So. And you have power electronics that goes with it, integrating different parts of the thing, so we're gonna go extreme. That's why. It's not any more kind of an incremental approach to what we were doing in the past, is that we try to leapfrog the thing. And to basically, the challenge for us is to do two generation in one generation. This is what we have to do, and we are determined to do that.
Thank you, Luca. We will continue with Henning Cosman, Barclays.
Hi, thank you for taking my question. I just had a or two clarifications, actually. The timeline that you've shared with us, does that require proceeds from the IPO? Or, and maybe you can share with us how much you would ideally require, or how much you would accelerate or delay the timeline depending on whether you go ahead with the IPO. And the second clarification was, I think, Thierry, you, reminded us that some of the proceeds are already secured through your partners, Nissan, Mitsubishi, and Qualcomm. Is that also the case if the IPO would not go ahead at the time? And if so, how would you then determine the price for that investment? Thank you.
Yeah. Hey, hey, look, you know, on the first question, so, the timeline of the investment, et cetera. I mean, look, I hope I was clear in the presentation. You know, we will generate this year more than EUR 2.5 billion in cash at the Renault Group level. We generated 2.1 billion last year. We have, you know, a significant amount of cash on the balance sheet now. So we have ample resources to fund the development of Ampere if, for external reasons, the IPO were to be delayed, right? So we will plow ahead no matter what. This is, you know, the easy answer to your question. It's a crucial project for us.
As you can see, the cash burn is relatively limited, and it's split over a period of 18 months. So there's no question that we can go after, you know, the speed with the resources that we've got. On the second part, your question on the proceeds from Nissan and Mitsubishi, in fact, when we concluded, when we negotiated the agreements with Nissan and Mitsubishi, they actually wanted to be in this project, right? And the result of that is that if the IPO did not go ahead, there is an alternative investment agreement.
So if we were to develop a different structure for Ampere, but still keep it as a separate vehicle, Nissan and Mitsubishi were eager to be able to participate to that project in any case, you know? You have to realize, for them, it's a bridgehead for electrification in Europe, and they want to be part of it. So, that contribution is not conditional to the IPO.
We'll continue with number five, number four, sorry, José Asumendi, JP Morgan.
José, give you the mic.
Thank you very much. José from JP Morgan. A couple of questions, please. Can you talk a little bit about the absolute CapEx and R&D requirements of the business on a two-year to three-year view, and maybe how does the balance sheet look like, from the beginning? And then second question, coming back to the, to the cost savings you want to achieve in powertrain and battery, can you give us a sense of how much is it technology-related? How much is it price downs that you get from suppliers that may have already been signed already, with, with them?
So on the first part, on the R&D CapEx and the way the balance sheet looks. So first of all, you know, Ampere is live since the first of November, and so it's an existing business, and-
Already.
When we set up that business, we put in it all the ingredients to make it successful, right? And we talked about a lot of these ingredients today, the manufacturing plants, et cetera, but we also put the IP... right? So the past research and development is in the balance sheet of Ampere today. Going forward, as I mentioned, you know, the curve in R&D and CapEx is gonna go down in a very steep fashion because of the volume ramp-up. But from a funding perspective, I think the way to look at it, to be very, very sort of, you know, to give you a very short summary, when we do the IPO, the proceeds of the IPO will comfortably fund Ampere with no debt.
So the goal is for Ampere to be fully funded day one, and to not have to go back to require funding, either from the market or from the group. So that's what the balance sheet should look like. So we raise the funds through the IPO, that mostly, probably almost entirely goes to Ampere to fund it. That creates some cash on the balance sheet. It consumes a portion of it through the cash burn, and then starts generating cash in its own right and continues its path. That's the philosophy of the business structure that we're inventing and that we're putting in place at the group. It's true for Ampere, it's true for Horse, that will be managed that way as well. It's true for Flexis on the LCV side.
We try to create businesses that have the right level of autonomy and the right level of accountability, and to achieve that, we make them autonomous from a funding perspective.
On the cost side, you know, you've seen you have one part is about battery and powertrain, then you have the other part is on body and, you know, the reduction of the parts, and then you have, of course, an impact on manufacturing on the cost of the thing. So I'm not sure how much it will be. Of course, the two, the second two is about how you do things and what kind of technology you're using or how you are using technology, yeah? Because if we are able to get to 700 parts on a car, it's just like because our engineers will design the things differently, right? And then Luciano will, you know, manufacture them quick, et cetera, et cetera.
On the battery, I'm not sure I can give you a number, but I guess you have two effects. One is, we see a tendency for raw material to go down because of, you know, the context in general. Also because there is a lot of battery capacity, maybe not located in Europe right now, but in general, compared to three, four years ago, there is a much more understanding that battery capacity will be there, right? So you have a lot of OEMs, you know, battery producers that turn at 30%-40% of their capacity. So, and, you know, the general context will help us, and the macro will help us to get, you know, lithium, cobalt, nickel, at the, at the w e're already seeing that. So there is an effect on, on the thing.
Of course, if you, if you get into LFPs or other technology, it's the same thing because you are, you are not using so many rare earths, where there might be a risk of, let's say, scarcity and then, and therefore speculation. So LFP in our mix, compared to two years, three years ago when we started the project, will have a much bigger role. Also because, energy density of LFPs is getting so good that you can actually fit in the space you have, enough energy to, to make sure that the car goes for, you know, with a good range and, and with the right power.
But what is good about LFP, apart from a technical point of view, it allows you, as you, you know, to better master a more stable chemistry, better master thermal propagation, et cetera, et cetera. It's also the fact that the material that are used in LFP are less volatile. So this we see, there is that, this effect. And then, of course, there is also the way we will design the battery will integrate into the thing. So I will give you the answer because I don't have it, but it's a mix of both things somehow.
But if you take, maybe a comment on the raw material side-
Mm.
you know, we do every couple of months, we do a full forecasting, raw material by raw material, with some of our internal services and external partners, right? Typically, banks that do commodity forecasting. In the business case that we presented to you, we don't have major variations. In fact, we have a slight decrease in lithium in 2024, re-increasing after that, and we actually have a slight increase in both nickel and cobalt coming in the coming years. So we're not banking on cost reduction coming from raw material coming down, it's mostly our own fact. So it's mostly a technology play with the chemistry, the packaging, and the efficiency. That's what's ultimately gonna get there. Afterwards, the changes in raw materials, everyone's gonna, you know, get the same.
If they go up and down, we'll have to manage it like all the competition will have to as well.
One of the things that, maybe was not so obvious in the thing, we're making the choice of not installing a part capacity and paying debt ourselves, giving us the. But even in the car, we don't think it makes a lot of sense to put a lot of battery, because first, it's an ecological disaster. And we think that, maybe, for example, we will have, you know, a battery with the right energy density, but maybe with fast charging capacity. Because, you know, everything is cost and weight, et cetera. And we think at Renault in a cradle-to-grave, you know, with a cradle-to-grave approach, we don't look at only the thing. So we believe that's the best, the better philosophy in the long term.
This will also allow us to have a different philosophy we had in the first generation by reducing the battery we have there. Hopefully, for example, infrastructure will, you know, with the time, will get better and better, so people will have to load less energy on board from day one, and that will reduce the cost. I mean, typically, a car like this that will be used in urban environment doesn't need, like, a 50-kW battery to do what it has to do. Because, for example, we have the numbers on the Dacia Spring. I know Denis is not here because he's in Portugal today, but the Dacia Spring is average. It's a connected car, so we know, we know the usage of the thing.
It's 30 km average distance traveled every day, and it's 26 km per hour in average. That's. Yeah. And there you can put, you know, a relatively compact battery. Cost is down, and then we can offer a car that people can use, and that is very sustainable, for less than EUR 20,000. That's the philosophy of Renault. I'm not going to put a 200 kW battery on a pickup truck. That's, doesn't make a lot of sense. So why do we do, then, electric cars?
We'll continue with the sign number one, Pierre-Yves Quemener from Stifel.
This is Pierre-Yves with Stifel. Thanks for taking my question. I don't know who's going to take that IPO-related question again. Maybe to get it on a different angle, can you walk us through the different moving parts regarding the funding or cash burn or regulatory needs at group level that requires an IPO of Ampere, as we will receive a lot of pushbacks regarding the already mentioned IPO, as you have alternate cash sources, namely the Nissan shares that are located into the trust? And the other pushback that we get from investors is that opening the Ampere box to minority investors is going to leak value to those new investors at the expense of the Renault shareholders. Thank you.
Yeah, look, you know, I'll try to answer the second one first. You know, the question is: do you want to have 100% of a small pie or 80% of a big pie? You know, for us, the name of the game with the IPO is to try to accelerate the value, okay? By accelerating the value Ampere, of Ampere, without pulling on the group resources, and that will introduce the second, I mean, I guess your first question, we're self-funding that development, and therefore, we're enabling the rest of the group to reward the shareholders faster. I want to comment a few seconds on what the rest of the group is, you know? The rest of the group is Dacia, you know, incredibly profitable franchise, okay? The rest of the group is Renault International.
You know, we do great business outside of Europe, in North Africa, in Latin America, et cetera. The rest of the group is light commercial vehicles, you know, very, very profitable franchise for us as well. So what we're doing is keeping at the group level, you know, a part of the business that generates a lot of cash-
And will grow.
And then-
And will grow.
Will grow. We're putting, you know, some investment on international sales as well. Fabrice and the team had the occasion to describe what we're doing for the Renault brand outside of Europe. And so we're going to grow that, okay, and continue to make it cash at the group level. And the parts that require investment, we make them self-funded, you know? So take Horse, okay? Horse is going to be a structurally cash-generating entity from day one because it's going to work on a cost-plus basis, right? Because it'll do EUR 15 billion of sales, the synergies that it will generate between us and Geely, okay, will more than offset the cost plus in the second year of operation. So we'll start paying the engines and the gearboxes cheaper than if we had manufactured them ourself, right?
So we're going to generate more cash just because we're paying the engines cheaper, and we're going to have a large shareholding in something that's going to grow, generate cash, and generate dividends for us, right? So, so that's the recipe that, that we're putting in place, you know, I, I guess, in a nutshell.
I-
Hopefully, that answers your question.
I have another. You know, I want to build on what Thierry said. Your, your theory is that investors are actually rejecting the thing, right? That's your theory. So you come here, you don't ask a question, you make a statement, okay? We also had a lot of early looks with people, and we actually had a different, you know, impression, and we met a lot of people on the thing, just to also, to make the whole project more credible, more solid, et cetera. So the feedback that we have is different, okay? And how can the investor you're talking about judge about the opportunity of the IPO or not the opportunity, without seeing the numbers that we have presented today? So the whole game starts today.
You look at the numbers, you look at the thing that multiplies the volume by 25, that goes from zero to EUR 25 billion with 10% margin, with a, you know, a break even on cash flow and operate after, you know, one year into the game with all the things you've seen, and then they will judge, and we will see. I, I'm not making any judgment. We are here to present our project. We have been working two years and a half to do the thing, and we are confident that we have a very, very, very solid argument, and this thing is unique in Europe. And Europe actually needs people like us to push those kind of project if we want don't want to be behind into the game, you know, and confronting US on China, et cetera.
We need many of those projects, and we need the support of everybody to make it happen, and we are taking responsibility.
And look, you know, as Luca mentioned in the conclusion, you know, different investors have different expectations. You know, at the group level, we have a balanced portfolio of activities that have, you know, diverse profiles from a financial perspective. You know, some yield activities, some growth activities, et cetera. Ampere is a pure growth activity, so we think it's going to appeal to different types of investors as well. And in fact, one illustration is probably that we would, you know, never have brought Qualcomm into a discussion to invest in Renault Group. They are, however, very interested in investing in Ampere just because it's a different profile. And I think that brings us an opportunity, generally speaking, to get, you know, more funds to do what we want to do from a business standpoint.
We have a question from Thomas Besson, Kepler Cheuvreux, line number four. Thank you.
Thank you. I have a few questions as well, please. First, you want to be one of the companies bringing price parity by 2026, 2027, ICE BEVs. What happens if some of your competitors do that before that, like in 2025 or in 2024? Because the market for BEVs slows a little bit, and some of your competition brings in products quite aggressively, think of Tesla or Hyundai or whatever. Do you have the latitude to even accelerate your cost reduction program? That's the first question. The second, you have now, or at least you're showing us, a portfolio of products that could eventually sell somewhere else than in Europe.
Is it thinkable that Ampere goes beyond Europe and gives itself the possibility to compete in other markets? Last, really a question more about details. You show us 2023 with Ampere having half of its revenues to partners from partners. Can you be a bit more precise? Tell us what it is, and give us just a rough idea of pro forma numbers for 2023, 2024. What do the losses look like? Even if we just as an idea of magnitude, to be able to compare that with Ford or other companies that have shown huge losses. We understand where you want to go in 2025 breakeven, but the starting point is interesting as well. Thank you.
You want to answer the first one in terms of ability to go down? Of course, I mean, we are in co-
Yeah.
Sorry, we are in competition, Thomas, so there might be people better than us, but that, that's why exactly we're doing Ampere. We're trying to set up a system that can compete at the highest level and play finals of Champions League, because we're not doing that today. So we recognize this, we have to accelerate, and we put ourself in the condition to do. I mean, even on the other side of the world, they have two eyes, you know, two hands, and two, and two, two legs. So if they do it, we can do it, right? And that's the spirit of the thing.
No, I would just say, you know, I was going to say the exact same thing. You never know what the competition is doing. Our responsibility is to gather as much external information as we can on what is actually happening, and I can tell you that since we have a dedicated Ampere team, we're getting a lot more information, and then draw plans to be competitive based on the information we've got. If it evolves, we'll adapt. One thing I will say is, you know, when we did the Capital Market Day one year ago, we had the same kind of financial guidance in a nutshell, because we said breakeven in 2025 and, you know, roughly 10% operating margin in 2030. So the end result is the same, but the way to get there is dramatically different.
You know, last year, the revenue that we had embedded behind those numbers was significantly, significantly higher, and we saw what was happening from a cost perspective and a price perspective with the competition, and we put the teams to work to revise the profile, and that's how we came up with a 40% reduction. So look, we analyze and we adapt, but it's, it's never a guarantee, right? You know, it, it. I'll let Luca answer on the sales outside of Europe, but I'll touch on the partner sales. We have, in Cléon, we have some internal combustion engines that are made today, and in Maubeuge, we manufacture Kangoo ICE and EV, right?
We had a choice between moving those things outside of those plants to make them 100% EV, incur hundreds of millions EUR of moving costs, and potentially have plants that were not fully utilized, or let those products and components go until the end of life and maximize the financial outcome on the short term, and we opted for that. So on the one hand, if you're negative, you can say, "But then," you can say, "But then you're not a pure EV player." But okay, it's going to be a very small portion in a few years.
But you can be positive by saying, "That's a stable business that we can count on, and that acts as a buffer if ever we have tactical fluctuations in the market, like maybe we experienced this year." So I think, you should look at it as a risk mitigator, in fact. And then maybe on sales outside of Europe.
On sale, of course, from a commercial point of view, I think those cars, they might go, let's say, everywhere. We're preparing, you know, versions for Japan, for Korea. We're moving the cars, some of them, to Latin America, where we are present. Or, you know, we just launched the, I don't know, the Mégane to Turkey. It was a, you know, actually very impressive success. So I think commercially, we will go immediately everywhere we can, okay? The question is, is Ampere, you know, potentially one day also expanding in terms of operation outside of the European periphery? Let's see. Of course, it could be. I think that there are, there are potential, there that we will explore, but let's first consolidate-...
You know, and make this machine work today using electricity as a, you know, and France as a bit of a pivot of everything, and then we'll go out. You know, I also had to solve a lot of issues that were embedded. You know, we work hard with all the team, with Jean-Dominique, et cetera, to find solutions for the French, let's say, ecosystem. Because three years ago, we had a lot of holes, you know, into the thing. Right now, France is, you know, with the latest decision on FlexEVan, I think we are, we're fine, and let's make them work and then, you know, think about opportunities.
Because we'll have to follow opportunities for sure if we wanna keep, you know, very competitive and play against the Chinese and against Tesla, et cetera, we need to be very, very aggressive and fast. That's also important.
You asked a question on the profile of 2023, 2024, so, you know, we're not gonna give you any numbers, but we gave you the cash burn and the curve to get to the revenue. So that gives you a rough idea of what we're looking at, right? I'll let you do the math.
We'll continue with the sign number two, Harald Hendrikse from Citi.
Thank you so much. Thanks for the very detailed presentation. Two quick questions. Just on pricing, can you just talk about that a little bit more? I mean, EUR 25,000 and EUR 20,000 for your products, you know, are very impressive numbers, but it's super important that you hit them because that's where the demand, you know, levels are gonna be. If you then look at the revenue projections, right, we're projecting on average EUR 33,000 or so in 2025, dropping down to, so, you know, under EUR 25,000 on average. Can you talk about how fixed those cost projections are for you? What risks there are to those pricing strategies, and what drives the EUR 33,000-EUR 25,000 reduction in price per unit that you have in your forecast?
Is it mix or, you know, how does the content per vehicle change? And then secondly, you know, very interesting, the setup, and thank you for detailing a little bit the contractual nature between Renault Group and Ampere. Is it possible that you can give us a little bit more detail? You know, the repayments that Ampere makes to Renault Group, are they all of a variable cost nature, or are they fixed, you know, as a proportion of the fixed cost for Renault Group as well? You know, and similarly, on the financial services side, how are you gonna share the profits Mobilize makes on Ampere vehicles? Sorry, a lot there, but-
Okay.
Yeah.
So on the average revenue per unit, your math is approximately correct. You have to keep in mind that there's revenue that comes from partners and aftersales, et cetera, in there, so it's actually a little bit lower than the figures that you're stating, just to be clear. From the mixed portion of that, today's revenue is only Mégane, which is a C-segment car. Ultimately, the mix becomes, you know, roughly 50/50 between the B-segment car and the C-segment cars. So that has an impact, which you can see in the bridge. The rest comes from the cost reduction activities that we partially give back to the consumer. On your second question, the relationship between Renault and Ampere.
So, as I said, there's kind of four categories. There's a category of supply agreements, when Ampere makes a car for Renault or etc. So that's, you know, basically a variable cost type of structure. There's service agreements, so some of them are ad hoc service agreements for the development of a specific upper body, for example. So that's a fixed cost, you know, that will come at the moment of the development. Then there's sort of manufacturing and supply services. So this is when Ampere uses some of the workforce of Renault to organize the logistics and organize the purchasing, so that's kind of a variable cost, right?
And then there's general services, such as IS/IT support, you know, a portion of my team is gonna be billed at Ampere for accounting services and stuff like that, and that's fixed cost, right? So there, there's a combination of all that. All of these have been, you know, sort of put into very specific contracts, negotiated. In fact, I think, one very important thing to have in mind is, the basis that we use to elaborate these contracts is, is the ones that we used for Horse. So in Horse, we have a partnership with Geely, an external partner, an external partner. So, you know, we had to do something that was very arm's length. So we took that as a basis.
It's very simple and simple.
It's very simple. We took that as a basis and adapted it to the Ampere model, and, you know, it, it obviously has to be tax compliant and, and all that. So it's a, you know, it's a very, very, I would say, simple arm's length type of relationship.
It's also, the fluxes are actually relatively balanced.
Yeah, I think it's important to think that, you know, there's this kind of mindset that it's only one way, but it's actually balanced, you know, between the things that Ampere is gonna do for Renault Group, such as EV development, software development, things like that, and the stuff that Renault is gonna do, you know, some of the upper body development, the flows are actually pretty balanced. So it, it's not like there's someone that's dominating the other. I think, you know, the quality of that setup is that it forces competitiveness. You know, we already have discussions with people in Horse and people in Ampere saying, "Well, you know, that long-term service agreement for finance, maybe I can do it a bit cheaper on my own." Those are great discussions, you know? They're the ones that we wanna have.
Because ultimately, they're the ones that are going to enable the group to become more competitive. That, that's kind of the recipe.
Sign number four, Stephen Reitman from Société Générale.
Thank you. Again, thank you for the presentation. Very impressive how you are emphasizing the relevance of the French industrial base with ElectriCity and talking about bringing costs to Eastern European levels, you say by 2025. So I'd like to question then maybe how, what steps are you actually taking beyond. You've mentioned about the, the, the reduction in hours are taken, but clearly, there are substantial cost differences between Eastern Europe and the north of France, just in terms of labor alone. And if you can get costs down to this level, why do you need to make Twingo then in, maybe in, outside France?
For two simple reason. One is that we are full, and, and this in France, on all sides, at that horizon. And the second is that I also, also have the responsibility for other people where I haven't, you know, found a solution so far. So, so we haven't decided, it's not official, but, you know, today, Revoz is, let's say, producing the Twingo EV, so it's one of the options that is open on the table. So I think we need to be, let's say, flexible, also strategically. The, the, let's say, the, the real, the real target of this thing is to be extremely competitive in terms of cost.
We're gonna do everything that is necessary within the, you know, European environment to bring, you know, the sourcing, the whole thing, the development cost down because we wanna offer, you know, we want to respond to the challenge that the system is giving us to be able to offer a profitable small car, electric, in Europe of a new generation below EUR 20,000.
One thing that's important to have in mind is, on an EV, the labor content is lower than it is on an ICE. And actually, for us-
Yeah
the value of transformation in the plant is lower than the logistics cost. So having the proximity actually works great. It's actually a net, net good guy to have the suppliers in France around you. It's better than having the plant far and suppliers that need to ship stuff across the world, not to mention the ESG implications.
I think we also have a responsibility to France and to Europe, you know, as leaders, as economic leader. So that's why we do it. We take the challenge.
We have a new question, sign number four.
Yes, Renato Gargiulo, Intesa Sanpaolo. I have a question on the new revenue stream coming from software-defined vehicles. You didn't give any, let's say, particular aggressive indication on in your plan, like some others. I was wondering, also considering, I would say, the better margins which new service revenues should have, is it a fair assumption to expect in the second part of the plan, this kind of revenues to reach, at operating profit level, 5%-10% of your of your target for Ampere? Thank you.
Anyone else?
Well, look, I think 5%-10% is, you know, probably not very far from your add, probably closer to 5% than 10% with the assumptions that we've built in. I mean, as Luca said, and I said, we took conservative approach to it, just because you don't know. I mean, I don't know how much you've paid for apps on your cell phone recently, but you really only pay for things that really provides a lot of value, right? And so we're comfortable that that's gonna happen on charging services, on, you know, very specific apps, but not. I think it would be ambitious at this stage to put in the business plan EUR 1,500 or EUR 2,000 , like some others have done.
If it turns out that that becomes a bigger revenue stream, we'll be happy, but at this stage, we wanted to have something conservative.
Yeah, as we said during the speech, let's make it more clear. We justify from business point of view, the SDV coming from the other angle, so from things that we know, we know how to manage, right?
Mm.
So if I tell you an SDV car is a car that is for three generation, for three cycle, connected to my after-sale service, from to my cloud, and nobody can get in, and I keep the connection with the product, I will make money, you know, in aftersales, because today we probably lose, I don't know, 50%, 60% of the, let's say 50% of the customer after warranty expires. You know, that thing mechanically will keep the product, not the person or the customer, the product, maybe 15 years into the system. So I can upload functionality, maintain the thing, et cetera. So it's a very basic, no, no fancy stuff, right?
If I tell you that the car will be able to be upgraded all the time, of course, a car where you change the functionality and the state-of-the-art has a better residual value than a car that stays with the functionality of five years before, right? And we make estimation, and you have seen that in some connected cars. You can see, for example, Tesla's has, has had, at the beginning, a very high residual value. One of the reasons is not only the appeal of the brand, but was also the fact that the car could always be upgraded, okay? So we factored into our business case this. And the other thing, from a pure cost point of view, you are in a sector where semiconductors going at doubling power every 18 months. So you have 80 CPUs today, you have five tomorrow.
Those are going, you know, twice as fast every 18 months. One day, those 5 will cost less than 80, with all the connection and all the things, et cetera. And we know because of the way the SDV gives us capacity, the operational system, Android-based, et cetera, we will slash by 50% maintenance and development costs into the thing. So speed will be higher, cost will be less. That's why we justify. I'm not counting on the fact that we will invent the magic fancy service that everybody will want, that will pay EUR 100 a month to do this. I think it's very risky. But if it comes, we will do it. The first car on which SDV will come will be actually FlexEVan.
This is a commercial vehicle designed with an electric skate designed for professional use. In that case, we can clearly see the benefit of having a microservice architecture, where we can add services for people that are delivering stuff, et cetera, and connecting this vehicle to the software of the company, et cetera. This is very obvious, but for a private customer, it's, you know. I wouldn't do it. That's why we've been very prudent.
We have a question, site number four.
Thank you. It's Michael Jacks from Bank of America. I've got two questions. First one is just on pricing, and more specifically on the execution of price reductions. Would you be looking to pass on some of those cost savings to consumers on models that have already been launched, as Tesla have done, for example? And how would you consider the negative implications for customers' residual values, as well as your own for the leasing business? And then secondly, is just on your growth assumptions, the 30% CAGR target by 2030. Just want to sort of read that in conjunction with the 25% market growth that you highlighted in one of your slides. And if you were then to also consider mixed dilution and price reductions, would suggest very significant outgrowth versus the EV market.
Just wanted to get a sense for-
Would suggest what?
Outgrowth.
Outgrowth.
Outgrowth.
Yeah. If you could just give us a sense for how you think about that?
Okay.
Is there an element of cannibalization of existing Renault ICE and hybrid cars? Thank you.
Look, maybe I answer to the first part of the thing, maybe come back to that. I mean, on the pricing thing, let's take a look at things like this. We have been very disciplined, you know, in a time where the, the, you know, the market has been very shaky. It still is, with people, you know, dropping pricing and then bouncing back, et cetera, et cetera. We have been keeping the thing because, you know, we are here on the EV market for the long term, right? So this is a ride that will probably last 20 years. And so it is right now the time where you, let's say, set the basis for a healthy business. Otherwise, we go back to the time where we were pushing cars, you know, and killing our profitability, et cetera.
So it's very important for us that we keep a very healthy business. In fact, when you look at Mégane residual value, even in a very complicated, let's say, environment, the Mégane residual value are very high, and they are actually increasing. So a good sign, because that thing, from that thing, you can then, you know, build competitiveness, because maybe with those residual value, you have a very, you know, competitive, monthly rates of the thing. So for me, it's very important that the, as much as we did for the old Renault Group, even within Ampere, value over volume, it's a clear, you know, you know, the order of, of things, okay? In fact, we are already doing a lot of effort to reduce the cost of the car.
If you look at the Scenic, and you compare the relative position of the Scenic to the Mégane, actually, the Scenic is already much more competitive, okay? And that means potentially we'll have to adjust a few things, but there are different way of doing it. You can lower down the price. You can, for example, increase the content for the same price for the customer, so you don't have an impact on residual value. You can actually play with the margin that you have that you make your financing offer or leasing offer more competitive, yeah, but you don't destroy the residual value. The residual value of a car is very much influenced by the right management of the balance between how many cars you put in the market and how much demand it is. It's clear, right?
So that's the real, you know, secret sauce to do that. And so far, we had, of course, to do some sacrifice and not push many Mégane in channels and, you know, 0 km demo cars. We kept the thing right, and we are very happy. The car is a conquest car. You know, feedback is very good, quality is good. You know, let's look a little bit long term and not panic.
On the CAGR, I think, you know, it's 25% growth rate on the European market, and we've embedded 30%. You have to take into consideration that we're starting with one car. So we start from a very low base, so that's part of the answer, you know, and so at the end, when we get to the 1 million vehicles, it's a range of seven cars. So we're really kind of in a transition phase, where we're phasing out Zoe and soon to phase out Twingo EV. So we are actually at a low point in terms of EV penetration, and then as we gradually build the range, we'll cover a bigger portion of the market. Today, we're on C segment only with Mégane, and we'll be on C segment, on B segment, and on A segment.
So that explains, you know, better market coverage.
We'll take a last question. So for line number two, Andrea Balloni, Mediobanca.
Good afternoon. Thanks for taking my question. I have a general one about the full electric market in Europe. We are around 14%, 17% penetration, but it's probably a touch lower compared to the initial expectation for this year. In the chart you have put in your presentation, you have a target of around 75% penetration by 2030. That is a big acceleration in the next years. What do you expect for the next 12 months? When should we expect a real acceleration for this penetration? And what could unlock this market in Europe? It's just a matter of offer and pricing, or there is also something more structural that could unlock this market? Thank you.
I mean, my take on this is that you will have a. In terms of offer, it's becoming already, you know, let's say pretty wide in Europe. But of course, for example, there's nobody that's really, you know, tapping into, you know, for example, small car, and because they won't be ready. Maybe there will be some, you know, Chinese cars coming from, you know, as a CBU to Europe, but this is not a sustainable business. So we'll be a couple of years ahead of anybody with those three cars. And if we combine both of these, it's like 35% of the European market, okay?
So I think we need to get people, you know, give to people the car that they can afford or they want to buy. It's very difficult to say what, let's say, what will happen in the next months. We don't have a crystal ball. We can make hypothesis scenarios. For sure, what happened in the last months was, you know, inflation was strong. You know, the energy cost was scary for some people of electricity, maybe linked to gas fluctuation. You remember a few months ago. Infrastructure are not picking up at the speed that is required, and very important, this is still not a natural, you know, demand, the EV demand, if we want that thing to grow so quickly, okay? So it needs to be subsidized.
And there's been a lot of countries in Europe that have taken the subsidies out of the thing, and we could clearly see the effect on that. So our call is to the authorities, to the government, if you wanted to decarbonize transport, just be aware that you will need to put in your budget some money to actually accompany, let's say, facilitate for the people, this transition to electric car. That's very clear. If we see that subsidies are going to continue to go down because they are gonna have to put the money somewhere else, then you can come up to some conclusions. And that will be slower because we will reduce the price of electric cars to the level of ICE cars.
So there will be a moment, and it's not like in 10 years' time, where, the price of the car will not be the problem anymore, okay? But, of course, right now it is because of the things that we know, and we probably need, you know, local authorities to bridge that time and to allow us to make money, because if we don't make money, you know, it's a strategy with short legs, and then, at the same time, give the people the chance to jump on an electric car. But, you know, twelve, you know, getting three, four, let's say five points in a, in a year in terms of percentage is actually pretty massive, right? Because you have never seen a technology going so fast in Europe.
Look at, for example, just for your culture, look at how fast diesel established itself in Europe, how fast hybrid established, and compare with the how fast electric are going to the thing. The reality is that the, the regulator has decided that in 11 years, which basically is two cycle for us, that means that the decision that we are making today will actually go even beyond. The decision I'm making on the product today, they will tap into the, you know, company, you know, P&L until 2040. Because I need maybe three years to do a car, okay? This is 2027. To put two cycle of six years, 2027 + 12 = 2039. So already now, we are beyond the limit that the authorities are giving us. You see what I. So that's why I'm, I'm telling you that the train has left the station.
There will be no coming back. Maybe, maybe we can argue that EV will be won't be 100%. Maybe it will be 80, or maybe it will be 60, but 60 means 80 million electric cars in Europe, right? And I take, I take 10% of it because that's my fair share as Renault Group, it's 800,000. We're not so far away from the numbers that we are mentioning. Maybe I'm going to sell a few cars around, and I fill the 1 million that I'm talking about. So that's what it is. It's a very structural movement, and there is no way back. I'm the first one to say that, you know, going only on one technology is a bit risky, okay? But the electric part will be a big part of the European market because it's the law. It's the law.
Okay. Thank you very much for attending today, and I hope we were able to share with you the excitement of the launch of Ampere. If there are no media questions, we will end this session today, and of course, the investor relations team with Philippine and the press relations team will be available to answer all your questions. Thank you very much.
Thank you.