Nissan and Renault announced Tuesday it would rebalance its perpetually shaky partnership—so-called the Alliance—into a more equitable partnership. Both automakers agreed to a 15% ownership stake in each automaker, with the remaining balance of what Renault owned in Nissan held in a trust until those shares can be sold. It’s a dramatic rebalancing of a tenuous partnership that’s been ongoing for more than two decades and has been a lightning rod for not only the respective automakers but also their respective cultures.
For starters, the Alliance was formed from a loose partnership between the two automakers in the late 1990s out of necessity for Nissan. For many reasons, Nissan was on the ropes in the late 1990s—like many Japanese automakers—and Renault’s stake in the automaker of 38.6% effectively bailed out Nissan during its dire straits. Only a couple of years later, Nissan repaid the favor with a 15% stake in Renault effectively forming the Alliance—although it wasn’t called that at the time—and cementing the partnership. Since then, the Alliance has felt like more of an entanglement, hamstringing both sides.
Part of that reason has been Nissan’s success from its early 2000s bailout up until just a few years ago. Although Nissan was initially in trouble, its prospects at home and abroad were potentially more viable than Renault’s. That’s because Nissan already had a sizable foothold in the United States, where Renault has been absent since the 1980s and Nissan’s global sales have steadily outpaced Renault’s, too.
That’s led to a feeling of disproportionate control for some, in regard to Nissan. Despite Nissan’s relative success, Renault’s wielded its significant control in the Japanese automaker's boardroom, which put both cultures on a relative crash course. That’s because Renault’s largest shareholder is the French government, which meant that by extension, the Japanese automaker Nissan was partly—if not mostly—ruled by the French government. Culturally, that created issues for Japan, which fiercely protects its companies and workers—and its identity—creating a hurdle that was almost insurmountable.
Meanwhile, on the Renault side, led by then-economic chief Emmanuel Macron, France doubled down on its voting rights in Renault and didn’t relent when Nissan asked for it to reduce its stake. Instead, Renault agreed to vote alongside Nissan’s board—although it’s withheld some votes pending approval to slow down progress.
Nissan’s sales slowdown in 2018 leveled the field slightly, although Renault’s woes echoed Europe’s economy. Former Nissan, Renault, and Alliance CEO Carlos Ghosn’s indictment, detainment, and escape threw the Alliance into turmoil—and doubt—although both sides expressed a willingness to continue the Alliance.
That’s why Nissan and Renault’s announcement this week is significant for the future of that Alliance and electric cars. Each side will hold 15% of the other automaker, with an investment in Latin America, India, and Europe by both automakers, and Nissan investing in Renault’s EV and software startup Ampere. For Nissan, that’s a small price to pay to rebalance a partnership that’s felt to them like a one-way street in the past. For Renault, it’s a reset and a readjustment that could make them a more attractive partner for mergers, like it nearly accomplished with FCA. Or with Nissan after all, which has been hinted at before.
It's hard to say what went on in the back rooms but on the surface, it looks like Nissan paid a small sum to finally convince Renault to take a step back out of its boardroom unless it's ready for a marriage now—not just an alliance.
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