Japanese car maker Nissan committed to buying a stake of up to 15% in Renault’s electric vehicles unit on Monday, as the two auto giants unveiled details of their redesigned alliance.
The size of Nissan’s investment or even a firm commitment to put money in the EV unit, Ampere, has so far been unclear. Ampere is Renault’s flagship business and due to be listed on the market.
The reshaping aims to make the alliance with Nissan freer and more balanced for the next 15 years, Renault’s CEO Luca de Meo said.
“I consider that what we have agreed is a much better set-up than what we have had in the last past few years,” de Meo told a presentation of the new-look alliance in London.
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No financial details were disclosed on the valuation of the business on Monday, which some sources have indicated could be up to 10 billion euros. De Meo said the market would decide the value of the unit.
The alliance’s junior partner Mitsubishi Motors will also consider investing in Ampere, the companies said.
The reshaping includes Renault’s previously announced reduction of stake in Nissan to make the two more equal partners.
“We have now a new governance scheme that is much more straightforward, we can now operate like a normal company. Seen from Renault, (it) is about regaining some strategic agility without breaking necessarily the ties and the synergies that were existing,” Meo said.
The lopsided relationship, created by Renault’s earlier 43% stake in Nissan, had long been a source of friction among the Japanese car giant’s executives.
Ties between the two car makers were particularly strained by the 2018 arrest of Nissan’s architect and former chairman, Carlos Ghosn, amid financial scandal.
While Renault bailed out Nissan two decades ago, it is the smaller automaker by sales.
Valuation concerns
Investors and analysts will be looking for more clarity on the valuation of Ampere.
Renault’s brand is not seen as a strong one, so it may be tough for the French carmaker to raise a lot of money for Ampere, CLSA analyst Christopher Richter said.
“I wonder once this thing goes into the market how much money you would really raise, he said. “That’s why I think they’re going to push Nissan to pay too much.”
He said the revamped alliance could enable Nissan and Renault to work together on R&D, shared costs and a few shared products “with a little bit less rancor and acrimony between them.”
But he noted that Honda and General Motors have built a partnership that includes jointly developing lower-cost EVs together without any need for a capital relationship.
Sweeping remake
The pair had already announced that Renault will reduce its stake in Nissan to 15% by transferring a 28% stake into a French trust.
Renault will have flexibility to sell the Nissan shares held in the trust. However, “it has no obligation to sell the shares within a specific pre-determined period of time,” the statement on Monday said.
When it does sell, Nissan will have a right of first offer.
The companies also aim for synergies from joint projects in Europe, India and Latin America. They will work together in the EV business, electronics and solid-state batteries.
The future shape of the Franco-Japanese alliance has implications for both companies as well as the global auto industry. It also highlights how the immense technological upheaval in the auto industry is forcing companies to both partner and compete with a dizzying number of newcomers and tech firms.
Renault, for instance, has said it will partner with companies from China’s Geely Automobile Holdings to semiconductor giant Qualcomm and Saudi Arabian state oil producer Aramco.
The sweeping remake of the 24-year old alliance comes after months of intense talks. Discussions were complicated by concerns about the sharing of intellectual property with Renault seeking tie-ups with companies outside the partnership.
Renault’s board approved the deal on Sunday night, according to a source. Nissan’s board also approved it early on Monday, the source said.
- Reuters, with additional editing by Vishakha Saxena
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