Nissan Motor Co. has finalized plans to invest in Renault SA’s electric-vehicle venture Ampere, capping months of negotiations to rebalance the troubled automotive alliance.
(Bloomberg) — Nissan Motor Co. has finalized plans to invest in Renault SA’s electric-vehicle venture Ampere, capping months of negotiations to rebalance the troubled automotive alliance.
The Japanese carmaker will invest as much as €600 million ($663 million) in the business, the companies said in a statement Wednesday. Separately, the pair formalized a deal for Renault to reduce its ownership of Nissan to 15% by placing the rest of its current 43% shareholding in a French trust.
“These agreements provide us with a solid base to reactivate business operations worldwide in key markets, with the potential to generate hundreds of millions in value,” Renault Chief Executive Officer Luca de Meo said in the statement. “They give us the strategic agility that we need more than ever in today’s rapidly evolving environment.”
The Ampere agreement is a vote of confidence for De Meo’s strategy, although lower than anticipated. He’s been revamping the carmaker’s corporate structure to better navigate the shift to EVs and bolster profits, while trying to fix the Franco-Japanese alliance that also includes smaller partner Mitsubishi Motors Corp. The deal is expected to close in the fourth quarter.
“It is difficult for us to do business in Europe alone, so investing in Ampere gave us an opportunity to connect with other companies,” Nissan CEO Makoto Uchida said.
Mitsubishi said this week it will decide on investing in Ampere by the end of this year, at the earliest. Nissan’s investment may disappoint some Renault investors; Oddo BHF analysts had previously anticipated that the Japanese carmaker would commit €750 million to €1 billion to back Ampere.
The agreement hands the partners more freedom to pursue other projects. Renault is pooling its legacy combustion-engine assets with China’s Zhejiang Geely Holding Co. and is working with Qualcomm Inc. on semiconductors. Nissan is shifting to EVs and cutting costs as part of a plan to make more money from each car it sells.
Nissan raised its outlook later on Wednesday, and is now forecasting ¥550 billion ($3.9 billion) in operating profit for the fiscal year through March 2024, compared with the prior target of ¥520 billion. On a quarterly basis, Nissan will contribute an estimated €271 million to Renault’s earnings in the second quarter.
Read More: Renault Is No Longer the Weak Link in Its Alliance With Nissan
The companies presented an in-principle deal to rebalance the alliance in February, but finalizing it dragged on longer than expected, with weeks spent trying to iron out sticking points on intellectual property as well as the Ampere investment. Renault in June pushed back the timing of the EV arm’s IPO following investor feedback.
Tensions between Nissan and Renault had long simmered since the French carmaker rescued Nissan with a cash injection more than two decades ago. While Renault is Nissan’s biggest shareholder, the Japanese company owns just 15% of its partner, without voting rights.
Talks to revamp the alliance almost collapsed late last year amid a power struggle within Nissan. They accelerated after the departure of a key Nissan executive, Bloomberg reported last month. De Meo has worked with Nissan CEO Makoto Uchida to identify a series of common projects to rekindle the relationship. Those projects are proceeding well, Renault’s CEO said last month.
Both Renault and Nissan are under pressure as competition from Tesla Inc. and Chinese EV makers intensifies. This forced the partners to try to salvage a strained relationship that risked collapsing after a series of dramatic events including the arrest of former alliance chief Carlos Ghosn in 2018 and his daring escape from Japan a year later.
–With assistance from Tsuyoshi Inajima.
(Updates with Nissan results.)
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