Renault and Nissan in talks that could reshape the automotive alliance

PARIS/TOKYO, Oct 10 (Reuters) – Renault (RENA.PA) and Nissan (7201.T) said on Monday they were in talks on the future of their alliance, including the Japanese automaker considering investing in a new electric vehicle venture by its French partner.

The talks, which could result in the biggest alliance reset since the 2018 arrest of longtime leader Carlos Ghosn, have considered Renault selling part of its stake in Nissan, two people with knowledge of them said. .

Negotiations are expected to continue ahead of a presentation to Renault investors in early November, when the French automaker is expected to give an update on its new EV unit, which is codenamed “Ampere”.

Renault owns around 43% of Nissan, which in turn owns 15% of its long-time partner, in which the French state also has a 15% stake.

Shares of Renault rose 6% in early trading, making the stock the best performer in France’s CAC-40 stock market index (.FCHI). They were up 3.54% at 11:05 GMT.

Renault and Nissan said in a joint statement that they were “engaged in discussions of confidence around several initiatives”, including a potential investment by Nissan in the EV business and what they called “structural improvements”. in their alliance.

Renault CEO Luca De Meo, who was in Japan over the weekend, and Nissan CEO Makoto Uchida played central roles in talks over revamping its terms, a person familiar with the talks said.

A group of Nissan executives, including chief operating officer Ashwani Gupta, have also been involved in shaping discussions in recent months, the person said.

Renault is seeking to win over Nissan as an investor in its new electric vehicle business, which it is building alongside a separate combustion engine unit, essentially splitting off the higher-growth, investment-intensive part of its automotive business. .

In exchange for an investment in the EV business, Nissan is counting on Renault to reduce its stake in the Japanese automaker, a person familiar with the talks said.

France’s dominance of the alliance has long been a point of contention for Nissan, which wants Renault to cut its stake to 15% to come closer to its own stake in Renault, the source familiar with the matter told Reuters.

For Nissan, the talks could represent a chance to reset a structure that many executives at the Japanese firm have seen as lopsided, given the way vehicle development work between the two automakers has progressed in recent years.

Nissan may consider raising funds to buy back shares held by Renault, a person told Reuters.

Renault and Nissan declined to comment beyond their statement.

Seiji Sugiura, a senior analyst at the Tokai Tokyo Research Institute, said he didn’t expect Nissan to have trouble financing a takeover of such magnitude.

“My own guess is that Japanese investors — 60 to 40 — would prefer Nissan to operate more as a separate company, or at least with lower ownership,” Sugiura said. “If they’re going to do this, now could be as good a time as any.”

Any sale of a stake in Nissan to increase Renault’s stake to 15% – which at current market prices would amount to $3.8 billion – would not affect their continued cooperation, the source said.

Nissan may need to raise funds to buy Renault shares, the source added.

The source said Mitsubishi, another alliance partner, is also considering taking a single-digit stake in Renault’s EV unit.

Earlier this year, Nissan and Renault detailed their plans to invest $26 billion over the next five years in the development of electric cars.

Nissan is set to launch the Ariya crossover, its first electric vehicle since the pioneering Leaf, in the US market in the coming weeks. Its launch was delayed by about a year due to semiconductor shortages, Nissan said.

Reporting by Tassilo Hummel, Gilles Guillaume, Satoshi Sugiyama and David Dolan, writing by Silvia Aloisi; Editing by Barbara Lewis, Robert Birsel

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