French carmaker Renault SA and its Japanese partner Nissan Motor Co. Ltd. confirmed on Monday that they are discussing future opportunities concerning their alliance.
The two companies said the negotiations included a potential investment by Nissan into Renault’s new electric vehicle (EV) unit, which the Boulogne-Billancourt-based automaker is creating alongside a separate combustion engine entity.
Renault intends to split its EV and combustion engine businesses to keep up with rivals such as US EV giant Tesla Inc. and German carmaker Volkswagen in the race to cleaner driving.
Shares of Renault were trading 3.4% higher on Monday after gaining 6% in early trading to make the stock the top performer on the CAC 40 index.
Nissan Pressing Renault to Cut Down Stake
It was reported that the talks were about whether Nissan will be part of the new business Renault is setting up to keep EV assets in exchange for the French firm cutting down its stake in the Japanese group.
Renault, being the top shareholder, holds a 43% stake in Nissan, while the Japanese company holds 15% of the French carmaker minus voting rights.
A source with knowledge of the matter said the French dominance of the partnership had been an issue for Nissan, which looks to see Renault lowering its ownership to 15% to be at the same level as its own investment in Renault.
According to the source, Nissan may raise funds to repurchase the shares from Renault. Both companies have yet to comment on the matter.
Selling the stake, which would be worth $3.8 billion at current market prices, would not dent the alliance between Renault and Nissan, and the Japanese firm may have to raise funds to buy back the shares, the source stated.
Mitsubishi Motors Corp., another member in the partnership, was also reportedly considering making a single-digit investment in Renault’s EV unit.
Discussions are expected to continue ahead of Renault’s investor presentation on November 8, when it is also likely to reveal its new EV entity.
