Autos transition risk pricing: Renault and Stellantis implications for EV adoption

The Anthropocene Fixed Income Institute analyses the relative credit performance of automakers by their business strategies. If a firm has more than 5% of revenues in only EVs, it belongs to the ‘EV strategy’. If it has at least 5% of revenues in only Hybrids, it is a member of the ‘hybrid strategy’. Lastly, companies with more than 5% of revenues from EV and Hybrid separately are classified as 'dual strategy’ automakers.

Renault belongs to the ‘dual strategy’ and Stellantis to the ‘hybrid strategy’. Our research shows that Renault’s bond spreads have tightened more than Stellantis’ over the last seven months. This indicates that market participants view Renault’s EV and Hybrid strategy as a safer bet than Stellantis’ Hybrid-only approach.

This divergence in performance is reflected in equity markets year-to-date. Both automakers saw their stocks take a hit following their earnings announcements for earnings-related issues. The bond markets were resilient with minor weakness in spreads. Bond markets are where investors could look for differential climate pricing opportunities.

About the authors

Kamesh Korangi

Managing Director, Head of Portfolio Strategy

Kamesh is an experienced credit derivatives and bond trader who leads the development of AFII’s portfolio analytics tool, Co₂liseum. He was previously a market maker and credit analyst at NatWest Markets, and holds a PhD in deep learning.

Josephine Richardson

Managing Director, Head of Research

Based in London, Jo leads AFII’s research and a global team supporting fixed income investors as they align their portfolios with climate and sustainability goals. She joined AFII after 18 years in fixed income markets at JPMorgan.