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EDITORIAL | Nissan and Renault in Better Position to Develop Next-Generation Tech  

Nissan and Renault agree to rectify what has long been an unequal alliance. This renewed commitment could drive them to the industry's forefront.



Nissan and Renault
Nissan and Renault logos (Kyodo)

Carmakers Nissan and Renault have reached an agreement to restructure their alliance and reduce the French company's stake in its Japanese counterpart.

Renault's 43% stake in Nissan will be cut down to 15%, the same as Nissan's stake in Renault, to put the alliance on equal footing.

The restructuring of what has long been an unequal alliance is a welcome decision.

After all, competition in the global automotive industry will continue to intensify. The rapid shift to electric vehicles (EVs) has brought on a revolution in decarbonization and automated driving technology. This has ushered in what has been called a "once-in-a-century" period of transformation, in which more carmakers are striving to survive by forming alliances. 

This is a good opportunity for the Nissan-Renault alliance to boost its global competitiveness by accelerating the development of next-generation technologies.

Nissan and Renault
Renault Chief Executive Officer Luca de Meo announces a plan to spin off the electric vehicle (EV) business. On November 8, 2022 in Paris. (© Kyodo)

How the Rift Started

It all began when Nissan sought Renault's investment in 1999. The Japanese carmaker had fallen into a crisis, saddled with excessive debt and other problems caused by the collapse of Japan's economic bubble. Carlos Ghosn, who joined Nissan from Renault, implemented bold reforms that led to the restructuring of the company.

However, Nissan's shares in Renault did not give it voting rights due to restrictions under French law. This meant that the two companies were on an unequal footing in many respects, including research and development.

What became the trigger for the alliance's overhaul was Ghosn's arrest in 2018

Misuse of company assets had been conspicuous during his longtime control of Nissan. Subsequently, at the initiative of the French government, Renault offered a merger with Nissan. Although the deal was rejected, distrust of Renault continued to grow within the company. 

Until now, the alliance had not been based on economic rationality. Moreover, it conflicted with the interests of Nissan's general shareholders. It is only right that such an alliance is overhauled.

Nissan and Renault
Nissan and Renault logos (©Sankei)

Stronger Alliance for Greater Innovation

What happens next is crucial. One of the strengths of the alliance has been cost reduction, which the two companies achieved through joint procurement of car platforms and parts. While building on such strengths, they must also rebuild their trust, which forms the cornerstone of a true partnership. 

This time, Nissan also agreed to invest in Renault's new EV venture. The scope of their alliance is set to expand into new technologies including EVs.

As young companies such as Tesla (20 years old in 2023) boost their presence in the EV market, Nissan and Renault should leverage the synergy of their alliance to develop and accumulate new technologies.

Furthermore, with newer entrants like Google also developing automated vehicles, the French-Japanese alliance should seek cross-industry collaboration to protect its competitive edge. 


(Read the editorial in Japanese.)

Author: Editorial Board, The Sankei Shimbun

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