Nissan and Renault to rethink Alliance? Update

Nissan and Renault are thinking of restructuring the Alliance Renault-Nissan-Mitsubishi. Renault is planning to reduce its stake in Nissan and Nissan would invest in Ampère, the sub-company uniting the ‘electric activities’ of Renault. The French state, one of the biggest shareholders of the Renault group, insists on the Alliance’s preservation.

At the beginning of the Alliance, in 1999, Renault obtained 36,8% of the capital of Nissan, not in very good health at the time. At the moment, Renault has a 43% stake in Nissan, while the Japanese partner has only 15% in Renault. With the years, the growth of Nissan, the arrival of Mitsubishi in 2016, and the fragile financial health of the French company, the Alliance is under pressure too.

According to several sources, the negotiations between the partners for restructuring the Alliance have clearly accelerated. A lot of matters are still under discussion, but on Monday, just after the Suzuka F1 Grand Prix attended by Renault  CEO Luca de Meo, Renault and Nissan issued a common press release stating that there are “discussions on several initiatives to reinforce the cooperation”.

Nissan to invest in Ampère

That Nissan will invest in Renault’s new electric entity Ampère is already sure, the amount of the investment is not yet fixed. On the other hand, it is not known yet which percentage of Nissan shares Renault will keep. Will it descend to the 15% Nissan has in Renault Group or will it be a little higher?

One thing is sure, Nissan will not invest in ‘Horse’, the other new company within Renault concentrating on the ICE vehicles that are looking for outside investors. The Chinese manufacturer Geely seems to be interested. The fact that within the entity that is now to be called Horse, there is a lot of shared intellectual property isn’t making the discussions very easy.

Rethinking the Alliance

Renault shares went up more than 6% when the news broke loose yesterday, in a receding total market. The withdrawal from Nissan’s capital by Renault would occur in different stages to avoid sudden depreciation of the stock on both sides.

At the beginning of the year, the Alliance announced a common investment of some €23 billion in electrification, aiming at 35 new electric models by 2030. It is clear that such large investments ask for a clarification of the position of each member of the Alliance, also the smallest one, Mitsubishi.

New projects are also to be worked out, clarifying the geographical zones where each partner will be primarily working or specific car market segments. On the eighth of November in Paris, Renault will give more details on its future plans with its two ‘legs’, Ampère (electric) and Horse (ICE). We will probably get more detailed information on the future of the Alliance then too.

French state asks for guarantees

At the Mondial de l’Auto there was a discussion between French Economy Minister Bruno Le Maire and Renault CEO Luca de Meo. There, the Minister declared that the French government wants guarantees that future decisions of Renault don’t endanger the future of the Alliance.

“At the moment, we are having discussions with Mr. de Meo,” said Bruno Le Maire, “because we want to be sure that the decisions made by Renault will preserve the Alliance with Nissan. We firmly believe it’s in the interest of Renault.”

According to the Minister, the Alliance is profitable for Renault “in terms of technologies and the use of platforms”. It also allows “a lot of complementarities”.  “We want to make sure that Renault makes choices that preserve the Alliance. We believe in the Alliance as being valuable from the industrial and from the technological point of view.”

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