‘Spy scam' could leave Renault red-faced

Murali Gopalan Mumbai | Updated on March 07, 2011

Renault's electric vehicle espionage saga, which hit the headlines in January, had all the ingredients of a crime thriller with a China angle to boot. Indications are that the French automaker could just end up with egg on its face with investigations showing up nothing so far.

Should this be the case, there could be a heavy price to pay. Renault had suspended three executives who were suspected to be part of this scam and they would naturally be pressing for heavy damages.

Media reports also suggest that the French government, which has a 15 per stake in the company, is not going to take too kindly to this drama given the political consequences of China being under the scanner. Finally, heads could roll at Renault with talks doing the rounds that some of its top management will face the axe.

Will this include Mr Patrick Pelata, the Chief Operating Officer, whose interview to a French newspaper was the first sign that Renault could have just goofed up in this entire drama? The core of the interview was that the company had been ‘tricked into believing' that there was an espionage issue in the first place.

Hefty compensation

The investigations are not over yet but it increasingly looks as if nothing concrete is likely to emerge that could indict the three employees who were shown the door. On the other hand, Renault may now have to prepare to ‘cough up millions' as part of a hefty compensation package to the trio.

Veterans of the auto industry say the company could also end up facing some ‘indirect flak' from China which was suspected to be the beneficiary in this espionage drama. In all fairness, Renault did not once make a direct comment on any such link but even the initial speculation may have caused some friction in relations. Its global ally, Nissan, has big plans for China where one of the growth drivers is electric cars.

Renault is bullish on the electric car project where it proposes to invest €4 billion in the coming years. Mr Carlos Ghosn, Chairman and Chief Executive Officer, has stated that it is his company's intent to pursue the goal of affordable, mass market electric cars.

Renault-Nissan is also banking on the fact that the battery will be made in-house which translates into huge savings and could give the opportunity of big business from other companies. In fact, on a recent visit to India, Mr Ghosn had said that he would be “very interested in any battery project which is simple and affordable”.

Published on March 07, 2011

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