Renault boss flies to Japan for critical talks about the Nissan alliance

Renault boss Luca de Meo has jetted to Tokyo for a weekend of talks with Nissan boss Makoto Uchida to break an intellectual property impasse and potentially pave the way for a historic restructuring of the automakers’ alliance.

De Meo’s visit focuses on two proposals aimed at securing Renault’s future but which, according to people close to both sides, crucially require Nissan’s approval.

The alliance between Renault and Nissan, first concluded in 1999, has held together despite tensions. However, as the global automotive industry inexorably shifts towards electric vehicles, the pressure on both automakers to make them better is mounting.

The first proposal is the French group’s ambition to shift part of its internal combustion engine business to China’s Geely, people said. The plan is part of Renault’s long-term commitment to sell only electric vehicles, but will require its approval given its historic sharing of technology with Nissan.

People familiar with the matter said Renault’s plan will most likely be to set up a new joint venture with Geely’s Aurobay business, a unit co-owned by the Chinese automaker and Volvo Cars, which owns the remaining engines business of Volvo operates.

It’s a move that has met strong opposition from Nissan, which does not want to share technology it has co-developed with Renault over many years with a Chinese company, the people added.

De Meo wants a deal with Geely to be finalized before the French automaker’s Capital Markets Day in early November.

The second proposal being discussed this weekend is Renault’s requirement that Nissan invest in a new “electric vehicle and software” entity, which the French automaker eventually plans to list as a separate company called “Ampere.”

While resolving the intellectual property dispute is a key objective of the talks, Nissan will take the opportunity to demand a significant reduction in Renault’s 43 percent stake in the company – a long-time source of tension.

Although Renault has historically opposed such a change, opposition has eased as it instead seeks to strengthen collaboration with Nissan on operational projects, according to two people.

Renault executives have argued that the alliance with Nissan will live or die on its ability to advance joint production plans and open the door to possible changes in ownership structure in recent months, people said.

“There have been discussions about all of this. The important thing now is to stick to what underpins the alliance, the capital structure itself is a bit irrelevant,” added one of the people.

As the two companies wrestle with the alliance, their main competitors forge closer ties. Stellantis, formed from the merger of Peugeot-owner PSA and Italy’s Fiat-Chrysler, is now one of the most valuable automakers in the world, while Honda and General Motors work closely together on battery technology.

Renault, Nissan and Geely all declined to comment. The French state owns 15 percent of Renault and will have influence over any changes to the automaker’s stake in Nissan. The French economy ministry declined to comment.