Renault-Nissan Discuss Governance Restructuring... Considering Investment and Stake Reduction in Electric Vehicle Company

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] French automaker Renault and Japanese automaker Nissan Motor have discussed plans to adjust their current governance structure that has lasted for over 20 years. Nissan is considering investing in an electric vehicle (EV) company that Renault is preparing to establish, while Renault is reportedly looking into reducing its 43% stake in Nissan.

According to the Nihon Keizai Shimbun on the 11th, the alliance of Renault, Nissan, and Mitsubishi Motors announced this the day before. On the 7th, Luca de Meo, CEO of Renault, and Makoto Uchida, President of Nissan, held talks during de Meo’s visit to Japan, where they discussed investment in the new EV company and a review of the capital relationship between the two companies.

The three-company alliance stated in a press release that Renault and Nissan are conducting discussions to "strengthen the alliance’s cooperative relationship and future." Besides Nissan’s investment in Renault’s EV company, the Nihon Keizai reported that they are also considering "structural reforms to make the alliance’s operations and governance sustainable" and "agreements on strategic joint ventures regarding markets, products, and technologies."

Additionally, on the 9th (local time), the French daily Les Echos reported that Renault is considering lowering its investment ratio in Nissan. Currently, Renault holds a 43% stake in Nissan, while Nissan owns 15% of Renault. Renault is reportedly exploring reducing its stake in Nissan to around 15%, matching Nissan’s stake in Renault, and the French government, Renault’s largest shareholder, is said not to oppose this plan.

If the negotiations are finalized, it will mark a significant change in the governance structure of the two companies, 20 years after Renault acquired a 37% stake in Nissan during its management crisis in 1999, becoming the largest shareholder. Under French law, Nissan has not been granted voting rights based on its stake in Renault. The Nihon Keizai explained that this issue has long been regarded as a challenge for Nissan.

The reason Renault is moving to adjust the governance structure is interpreted as the growing need for investment in electric vehicles. Renault recorded losses for two consecutive years until 2020 and faced financial and managerial difficulties after withdrawing from the Russian market, its second-largest after France, in May. To overcome the crisis, Renault has strengthened its EV business and reportedly proposed the new company investment to Nissan first last spring.

In February, Renault separated its business into a division producing conventional internal combustion engine vehicles and a dedicated EV division, naming the EV subsidiary Ampere. Renault, which needs to secure investment funds for EVs, has no choice but to rely on investments from Japanese partners such as Nissan and Mitsubishi.

Renault plans to hold an investor briefing on the 8th of next month to reveal new business strategies, including the EV business spin-off. Foreign media predict that the outline of the governance negotiations will also be disclosed at this briefing.

This content was produced with the assistance of AI translation services.