Nissan May Skip Renault Revamp Over Sharing Tech With Geely

Nissan is willing to walk away from a deal with Renault if the French carmaker wants to license jointly developed patented technologies to other players, including new Chinese partner Geely, according to people familiar with the negotiations.

Nissan and Renault appeared to be close to a final agreement a few weeks ago, but Nissan's board and management have recently raised concerns about Renault's plans for intellectual property, according to people familiar with the matter. These people asked not to be identified because the information is not public.

The joint technologies include expertise in areas such as autonomous driving, hybrid powertrains, solid-state batteries, safety systems, battery-management software and other know-how critical for developing self-driving, electrified vehicles, according to one of the people.

Nissan is concerned about potential risks associated with Renault CEO Luca de Meo's plan to merge the French carmaker's combustion engine operations with China's Zheijiang Geely Holding Group, according to people familiar with the matter. Nissan is seeking assurances that key technologies will be protected under any deal with the Hangzhou-based automaker, which also owns the Volvo and Lotus car brands.

Makoto Uchida, Nissan's CEO, said he was "surprised" by speculation that the IP discussion may derail the wider deal. He acknowledged that technology is a "very important core asset for the alliance," but added that talks are ongoing.

Uchida said in an interview with Bloomberg News Friday that there are of course areas where the company needs to protect its core technology. He said that as CEO, it is his duty to make sure that those areas are protected.

Geely did not respond immediately to questions from Bloomberg. A representative for Renault declined to comment. Shares in the French carmaker declined as much as 1.9% in Paris before recovering to rise 1.1% at 1 p.m.

RBC analyst Tom Narayan says that the situation was always going to be contentious. He explains that there are political and technological factors involved, and that he understands Nissan's concerns

Renault and Nissan have been in talks for months to reshape their 20-year-old alliance. Under the current plan, Renault will reduce its ownership of Nissan over time to 15% from the current 43%. In return, Nissan may be willing to invest $500 million to $750 million for a stake of about 15% in Renault's new electric-vehicle unit, code-named Ampere.

Uchida said that there are some things that they cannot yet discuss publicly because they are still finalizing them. She added that she is having very close discussions with Luca and that they respect each other. Uchida emphasized that the most important thing between them is trust.

Renault is set to speak with investors on Nov. 8, where de Meo is anticipated to give more information on financial targets and the split-up plan.

Uchida said that Renault, their partner, is going to have a capital markets day and that they need to support it. He added that he wants the event to be successful.

The shift in ownership would alleviate an imbalance that has been a source of friction for years. Although Renault has a larger stake, Nissan has sold more vehicles in 2021, with 4 million compared to Renault's 2.7 million.

The 2018 arrest of Carlos Ghosn, who was sent in to run the carmaking alliance when Renault rescued Nissan two decades ago, planted the early seeds for the re-balancing. The former chairman and chief executive officer, who denied the charges, escaped Japan in December 2019 while out on bail and is currently in Lebanon.

Although de Meo has indicated that he is willing to split up Renault with or without a deal with Nissan, the Japanese company's disengagement might make it harder to get the approval of the French state - which owns 15% of Renault and holds double voting rights - for such a transformative move.

Nissan's concerns could delay an agreement on the re-balancing of the alliance, which was supposed to be announced at a meeting of directors from Renault, Nissan and Mitsubishi Motors Corp. in mid-November, according to people familiar with the matter.

Another issue that Nissan is facing is the valuation of Ampere. Without a specific figure to go on, it is difficult for Nissan to determine how much to invest for a stake in the new company. Renault is hoping to list Ampere publicly, and this is causing some tension between the two companies.

Uchida did not comment on when any announcement would be made, or on the value of Ampere.

Under Renault's plans, Ampere would be based in France and employ about 10,000 people by 2023. The entity with Geely, code-named Horse, would also have a staff of about 10,000.

Uchida said that the companies have been discussing how to make their alliance stronger under the difficult circumstances they are facing. He added that they also wanted to speak about how the alliance could maximize the great technology and assets that both companies have.