Renault, Nissan and Mitsubishi presented a joint $26 billion electrification plan on Thursday as the struggling Franco-Japanese auto alliance tries to prove it is still a force to be reckoned with.
The push involves rolling out 35 new battery-powered cars by the end of the decade across five common manufacturing platforms. It relies on load sharing when it comes to developing new technologies such as next-generation batteries, automated driving features and software.
“These are massive investments that none of the three companies could make alone,” said Renault Chairman Jean-Dominique Senard. He told reporters and analysts the plan makes ties between the companies “completely unbreakable”.
We’ll see. For starters, the overall $26 billion figure includes funds the companies already announced separately last year, meaning their flashy presentation didn’t include any new spending. The executives were asked if the plan falls short of the $100 billion Volkswagen has earmarked for electric vehicles and software over the next five years.
At first glance, the alliance’s “leader-follower” strategy – where each company takes the driver’s seat in some regions and for some technologies, and takes the back seat in others – makes perfect sense to reduce costs and the complexity.
Nissan, for example, will develop solid-state batteries, while Renault will work on over-the-air software updates, with all partners eventually gaining access to finished products.
But the model is not without risks. If Renault were to screw up the software, for example, all three companies would suffer. Additionally, the trio still have to compete for key components, including semiconductors.
Despite all the smiley and happy talk on Thursday, it’s hard to understand how the tensions were fully resolved behind the scenes. The alliance nearly collapsed following the arrest of former leader Carlos Ghosn in 2018. Hari Nada, the mastermind behind the coup to dethrone Ghosn, is still with Nissan, and he still exists a cross-shareholding imbalance that has long been a source of tension. .
Renault owns a 43% stake in Japan’s largest company, with voting rights, while Nissan only owns 15% of Renault and has no voting rights. Senard brushed off several questions about stakes during the EV briefing, saying any changes “are not on the table today.”
A lot has changed since Renault and Nissan formed their alliance in 1999. Electric vehicles at the time were a long-time prospect, Elon Musk started an online payment company called X.com and China ranks 14th in the world in passenger car production, behind Belgium and Mexico.
Since then, Musk has made Tesla the world’s most valuable automaker and made inroads in Europe, where the Model 3 overtook the Renault Zoe as the best-selling electric vehicle last year. VW and Toyota have planned to spend $170 billion over the next few years to preserve their right to an industry they have dominated for decades. Tech giants including Apple and Google are working on self-driving technology as they try to disrupt the industry.
Senard still believes that Renault, Nissan and Mitsubishi have an advantage to be gained by working together. “We have a tremendous amount of resources that have been leveraged between our three companies,” he told Bloomberg Television’s Matt Miller in an interview. “We are now very optimistic.”