white smoke approaching the Union

white smoke approaching the Union

The Union’s executive council meets Thursday morning. It should ratify the agreement reached last week between Renault and Nissan on rebalancing their relationship. The end of a months-long series, with many twists and turns.

This Thursday, the leaders of Renault, Nissan and Mitsubishi will not meet at the table for their traditional and monthly executive council. The meeting will be held by videoconference. “We don’t need to make a trip to Japan,” we explain at Renault, “everything is going well, we’ll save ourselves a quick return trip”.

This video conference should facilitate the approval of the final technical details of the agreement reached last week between the two manufacturers. It will then be presented to the boards of directors of Renault and Nissan. The agreement should be officially signed in the coming days, possibly in early February, but the date has not yet been decided. “You have to adapt to the constraints of everyone’s schedules as well as regulatory constraints”, notes one at Renault. If Jean-Dominique Senard and Luca de Meo do not make the trip to Japan this Thursday, the Renault operating teams are there to “complete the file”.

Negotiations opened last week

Negotiations, which have lasted for several months between Renault and Nissan, opened last week. Nissan’s independent directors, known to be anti-union, finally gave their direction on restructuring the Alliance. This includes rebalancing the stocks of the two manufacturers. Renault will hold only 15% of Nissan’s capital, compared to 43% today, the same level as Nissan in Renault. The two companies will each have the right to vote on the other’s board of directors, which was not the case before and brought great frustration to both parties.

Negotiations have long stalled over intellectual property issues, with Nissan wary of sharing its patents with Renault’s new partners. The French manufacturer announced last November the creation of two new vehicles, the “Horse” of heat, with the Chinese manufacturer Geely as a shareholder, the other 100% electric “Ampère”, which will include the American giant Qualcomm in its capital.

These technical questions were resolved, of course it is a policy that has ended up convincing the most serious opponents of the Nissan Alliance. Emmanuel Macron received Japanese Prime Minister Fumio Kishida last week and assured him that the French nation supports the agreement. At the same time, Bruno Le Maire wrote to his colleagues at METI, Japan’s Ministry of Economy, assuring them that the Government would take steps to rebalance property ownership and that above all, it would not change.

“Having a written record was important for Nissan”, we slide to Renault.

Questions are still pending

One question, however, has not been decided and probably will not be before the signing of the agreement: that of Nissan’s shares in Ampère. The Japanese manufacturer will enter the capital of Renault’s 100% electric company, but the amount of its participation has not yet been determined.

“Nissan estimates that Ampère is not worth 10 billion euros in valuation as Renault calculates,” explains the Union expert.

The Japanese manufacturer, as mentioned for a while, will therefore not take 15% of Ampère’s capital, which would be equivalent to putting 1.5 billion euros on the table. “Nissan can’t afford to pay that much,” the source continued.

The impending agreement between Renault and Nissan is therefore still full of questions. “The most important thing for Renault is that Nissan is part of Ampère’s adventure, determining the extent of their participation is important but this does not prevent”, assures one side of the French manufacturer. This last point left open, and which will have to be resolved before the commissioning of Ampère in the summer of 2023, makes some observers question the case. “Renault agreed to almost everything, he had no hand in the negotiations. Luca de Meo, the general manager of the group, wanted to move quickly to reorganize the company, he found himself in a weak position”, judges always this connoisseur of the union. .

“Not really an option”

Who from Renault or Nissan won the fight? The answer is not self-evident. The two companies are now each a big name in the automotive world. The Renault brand, for example, sold more than 1.4 million vehicles in 2022, while Tesla is around 1.3 million.

“Nissan and Renault had no choice, concludes our Alliance expert. They need each other to survive and stay in the race.”