5858 How Renault's de Meo aims to move Nissan alliance beyond 'compromise'

How Renault's de Meo aims to move Nissan alliance beyond 'compromise'

Renault CEO Luca de Meo worked for more than eight months to reboot the automaker’s alliance with Nissan Motor Co. to move beyond a “culture of compromise” that had been the status quo in recent years, he said.

In de Meo’s view, a merger was previosly seen as the ultimate goal of the alliance, and as a result many projects between Nissan and Renault were done with that in mind rather than for sound business reasons.

“It forced a culture of compromise, which is not the optimal solution,” de Meo told Automotive News Europe in an interview late last year.

The two companies concluded negotiations last month to rebalance their cross-shareholdings, with each holding 15 percent of the other, and with 28 percent of Nissan that Renault holds put into a French trust. The trust can sell down that stake as market conditions warrant. 

In addition, the companies agreed to work on five new joint projects, and Nissan will take a stake of up to 15 percent in Renault’s new electric vehicle spinoff, Ampere. The alliance’s junior partner, Mitsubishi Motors, will also consider investing in Ampere, the companies said Monday.

Read more: CEO Luca de Meo on the new Renault: ‘Look at it as a tree with branches’

De Meo said that going into the negotiations to reboot the 24-year-old alliance he believed Renault could be successful as a stand-alone company, even without Nissan’s larger sales volume.

His first task when he became CEO in July 2020 was to put money-losing Renault on a sound financial and strategic footing, through his “Renaulution” plan.

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With that accomplished, he said, a revised alliance with Nissan would give both companies more freedom to think strategically.

De Meo said that Renault’s smaller size (he has reduced capacity by 20 percent) could be an advantage as the industry faces disruption from tech-focused startups and EV-only brands such as Tesla.

“We are living in times where everybody is producing less but making more money. Anyway, the average of the industry is 3.5 million cars, and Renault will be there,” de Meo said. Renault Group’s global sales in 2022 were 2.05 million; Nissan sold 3.2 million vehicles.

Size and synergies will always be valid in an industry as capital intensive as automobiles, he said, but in a time where volatility is very high, it may be just as important to be flexible and innovative as big and efficient. 

An automaker that focuses only on being large and efficient might miss a lot of opportunities, de Meo said. 

Proof of that could be Ampere, the EV and software spinoff that Renault plans as a separately listed company with investment from Qualcomm, Nissan and possibly Mitsubishi. The idea is that it will work with the agility of a startup, but can rely on the backbone of the Renault Nissan Mitsubishi alliance and its potential combined volume of up to 8 million units a year.

While Nissan agreed to become a shareholder of Ampere, it does not plan to do the same for Horse, a joint venture that Renault will create with China’s Geely Group that will develop and assemble internal combustion engines.

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Nissan’s manufacturing footprint for combustion engines is intertwined with EV components, making a spinoff more complicated than at Renault, which has largely separated the two activities.

At the same time, in a sign that the alliance in recent years had been following very different paths, electrification strategies often diverged rather than converged.

Although several new full-electric models share the CMP-EV platform, Renault and Nissan have different approaches to hybrids.

Renault has invested heavily in its E-Tech system, which uses two electric motors mounted on the gearbox, while Nissan introduced its e-Power technology, where an internal combustion engine is used as a generator to feed the battery pack that gives power to the motor.

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