The automotive giants reveal the details of their reshaped partnership with Nissan committing to buying up to 15% of Renault’s electric vehicle (EV) business Ampere.
The agreement, announced by the carmakers as a “rebalancing” of their relationship, comes after months of negotiations and Renault’s interest in making deals outside the established alliance. Apart from Nissan’s agreed stake in Ampere, the accord also includes a redistribution of the two automaker’s percentages of both companies and a plan for joint projects in Europe, India and Latin America.
Leveling the Playing Field
Under current agreement, the existing alliance between the Japanese car maker and its French counterpart will be extended for an initial period of 15 years. The renewed partnership deal will even out the previously lopsided stakes of the two companies with Renault going from a 43% stake in Nissan to equal Nissan’s stake of 15% in the French company.
“I consider that what we have agreed is a much better set-up than what we have had in the last past few years,” Renault CEO Luca de Meo said in a presentation of the alliance revamp in London.
Renault will be able to sell its Nissan shares but, according to the statement issued by the two carmakers, “it has no obligation to sell the shares within a specific pre-determined period of time.” As de Meo stated, Renault will act in “good faith” and sell off its Nissan shares in “an orderly manner”.
Nissan’s Bet on EV
The auto manufacturers also announced that the Japanese company will take a stake of up to 15% in Renault’s new electric vehicle venture, Ampere, although neither of the carmakers disclosed the exact size of Nissan’s investment.
“We regard Ampere as an enabler for Nissan to participate in new business opportunities in Europe,” said Nissan chief executive Makoto Uchida.
The firms did not share specific financial details about Renault’s electric vehicle concern, however, according to Reuters, certain sources believe Ampere could be worth as much as EUR 10 million. The auto industry is currently undergoing a major transition to EV, a market that is expected to go from USD 287.36 billion in 2021 to USD 1,318.22 billion by 2028, according to Fortune Business Insights.
The 24-year-long partnership between the two carmakers has seen its ups and downs. After Renault rescued Nissan from near bankruptcy in 1999, Mitsubishi joined the alliance in 2016. In 2018, scandal shook the partnership when the architect of the alliance, Carlos Ghosn was accused of understating his annual salary and misusing company funds although he denied the charges.
At the time, Mr Ghosn was the chairman of both Nissan and Renault and was also leading the three-way alliance between both carmakers and Mitsubishi.
Renault Looks to Other Partners
The rethink of the association between the French and Japanese carmakers comes after Renault announced late last year an agreement outside of the alliance with the Chinese group Geely. Under the agreement, the two firms joined forces to create a new propulsion system company that plans to supply the automotive industry at large.
“As Renault Group accelerates with its Renaulution transformation to capture value on the entire new automotive value chain, we are pleased to have agreed plans for an ambitious partnership with Geely to keep developing the ICE and hybrid engine technologies that will remain a critical part of the automotive supply chain for decades to come. We’ll be able to offer best-in-class powertrain and electrified solutions to multiple OEM brands worldwide, unleashing the market potential for this low emission technology,” said Luca de Meo in a statement at the time.