(Bloomberg) -- Renault SA’s plan to carve out separate electric-vehicle and combustion-engine businesses isn’t aimed at disrupting its global alliance with Nissan Motor Co. and Mitsubishi Motors Corp., the French carmaker’s chief executive officer said.
“The best thing I can do is actually propose ideas in a way that shows I’m not here to screw Nissan or the alliance,” Luca de Meo said in an interview as he wrapped up a week-long visit to Japan, the first since he became CEO in 2020. “I don’t want to impose any strategic choice on Nissan or Mitsubishi.”
Even so, De Meo’s idea of creating an entity dedicated to EVs based in France -- part of a push to make the Renault brand 100% electric by 2030 -- is adding pressure on his Japanese partners to choose whether to bet on Renault’s future as an EV maker or its legacy business. Such a transformational overhaul may even involve a reshaping of capital ties, including the possible sale of part of Renault’s 43% stake in Nissan.
But De Meo, like Renault Chairman Jean-Dominique Senard, was quick to stress that the historically low share prices mean it isn’t the right time for any sales. The stock of Renault or Nissan needs to be “at a higher level than today” for anything like that to happen, the CEO said.
Nissan owns just 15% of Renault and lacks voting rights. The unequal relationship is a sore point going back years, and it came into relief in 2018 when the arrest in Japan of former Chairman Carlos Ghosn strained the alliance and threatened its future.
Part of the impetus behind Ghosn’s ouster was fear within Nissan that he, as chairman of both companies, would push for closer integration between Renault and Nissan. De Meo said the issue was not on the table.
“The whole discussion about merging is completely out of scope,” De Meo said. “It’s not in the Zeitgeist anymore.”
Renault detailed last week plans to carve out an EV business, and establish a second entity focused on internal combustion and hybrid powertrains that will be based outside France. Nissan has said it’s studying the plan and wanted to learn more about it during De Meo and Senard’s trip to Japan.
De Meo said his visits to Nissan’s factories, discussions with engineers on future products and the Japanese carmaker’s work on solid-state batteries was encouraging. Renault’s CEO said he’s also interested in having more transfer of talent between Nissan and Renault “in a new spirit,” and with more direct contact than under Ghosn’s leadership.
“From the product point of view, they will be very strong,” De Meo said of Nissan’s plans to speed up the rollout of new models, a key part of the company’s turnaround strategy. “When it comes to EVs, Nissan knows what they’re talking about.”
Nissan recently returned to profit for the first time in three years and resumed paying dividends, a token of goodwill toward its largest shareholder. Despite Renault’s ongoing challenges, including a costly withdrawal from Russia, De Meo said Renault would have enough cash to run the business but would need additional funds for longer-term EV development, possibly by selling shares in the new entity to the public.
“I can pay for the products until 2025,” De Meo said. “All the things that I’m doing -- this idea of an EV company -- are meant to enable Renault to access, somehow, in a creative way to financing, to finance the next phase of the plan where I want to make Renault very progressive in its approach.”
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