How Renault, Nissan and Mitsubishi are planning a stronger alliance

Last Thursday, the CEOs of Renault, Nissan and Mitsubishi got together to announce…well, nothing really new. But that was not the point. The objective was to tell the world that the Renault-Nissan-Mitsubishi Alliance is strong and determined to find common synergies that will allow the three brands to thrive in an electric and connected future. And in that, it was undoubtedly successful.

“Three years ago, the Alliance faced a crisis unprecedented in its history, based on a lack of trust,” Alliance President Jean-Dominique Senard said in his opening speech. “This period belongs to the past.”

He reminded viewers of the online presentation that the Alliance employs 420,000 people worldwide, covers all major global markets and operates 29 factories. “The strength of the Alliance’s foundations is a fundamental strength of our three companies,” he said.

This solidity was very much in doubt in 2018 when then-CEO Carlos Ghosn was arrested upon landing at Tokyo airport, accused of financial irregularities. The soap opera that followed cast an unwelcome light on the tensions within the Alliance, precipitating the crisis.

Ghosn himself has alleged that he was set up by a Nissan board opposed to his plan to merge Nissan and Renault. Just last year, he called the 22-year-old Alliance a “zombie”. Nissan’s years of dissatisfaction with being led by Renault under the French company’s 43% stake in its Japanese partner after it rescued Nissan from bankruptcy in 1999 seemed to have finally boiled over.

Financial challenges

The financial troubles of 2019 accelerated in 2020 when the Covid-19 pandemic exposed structural weaknesses in both companies and triggered record losses. This focused minds on both companies and prompted the “leader-follower” strategy whereby Nissan, Renault and, to a lesser extent, Mitsubishi took the lead in certain technologies or regions. For example, Renault was the leader in Europe, Nissan in China and Mitsubishi in Southeast Asia.

Thursday’s presentation clarified each brand’s leadership in technology development. Renault is in charge of E/E architecture (for electrical/electronics, i.e. software and computing power), while Nissan leads in autonomous driving and solid-state batteries.

The new Micra

There was an important announcement: Renault will design and build a new Nissan Micra in Europe, based on what is now called the CMF-BEV platform, developed from the CMF-B ICE platform for small cars and also underpinning the new electric Renault 5.

At the event, Alliance assigned names to five electric vehicle platforms. Four of them already underpin the cars, but explained in detail, it felt like a coherent strategy. These would create 35 electric vehicles by 2030, with the largest – the CMF-EV which sits under the new Nissan Ariya electric SUV – eventually forming the basis for 1.5 million cars by 2030.

The promise that 80% of Alliance vehicles will be supported by common platforms by 2026, up from 60% currently, has also impressed those looking for clear signs that the Alliance is working as it should.

“We believe two clear messages emerge from the conference,” Morgan Stanley analyst Harald Hendrikse wrote in a statement to investors. “First, Alliance cooperation is back and second, the Alliance has a credible technology strategy, just like other OEMs.”

Competitive situation

Senard hinted that the three companies’ 2021 financial report due in February shows that the financial situation is back on track. “We went through strong crises in all three companies over the last five years and we were obviously not brilliant in terms of competitiveness,” he said. “All three companies have corrected management and are now moving to a much more competitive situation.”

Past analysts have argued that the Alliance will never be as quick to make decisions as its rivals because there is no overriding CEO to force the situation, as was the case when Ghosn was in charge. . Senard and Nissan CEO Makota Uchida eased concerns by pointing out that CEOs hold Alliance board meetings twice a month.

Not everything has been resolved. Renault’s attempts to establish a foothold in China landed it in the arms of Geely, rather than Nissan, although Renault CEO Luca de Meo was quick to absolve Nissan. The show of solidarity was in response to criticism that nothing seemed to be happening, according to Senard. “The main message from this meeting is that the alliance is strong and exists,” he said.

“There have been doubts in recent months and years about what the Alliance is. I even heard that the Alliance was silent and nothing was happening. On the contrary, we worked hard under the radar. It is clear that the bonds are extremely strong and in fact unbreakable.