(upbeat music)
- [Narrator] Renault and Nissan have announced
a long plan overhaul of their more than
20 year old alliance.
- We are now ready to move our partnership
obviously to a new era.
- [Narrator] The partnership withstood the ousting
of a leader, a global pandemic and growing pains.
The CEOs of both companies spoke
to the Wall Street Journal about their restructured alliance
and what it means for investors and the global industry.
- Importance is how we can transform right
under this difficult circumstances that we are facing today.
- So we are trying to create a company that is much
more agile, more oriented
to innovation because technology is evolutionary.
- [Narrator] But first, how did we get here?
(camera clicking)
The partnership dates to 1999 when Renault took a more
than one third stake in Nissan, which was struggling.
- They were in this kind
of marriage where they had to get the agreement
of the other if they wanted to cooperate.
- [Narrator] At the height of the Alliance,
they were joined by Mitsubishi Motors
and had a combined sales of more than
10 million vehicles a year.
But beneath the surface, Nissan saw the partnership
as uneven with Renault holding a controlling stake
in the Japanese car maker.
On the other hand, Renault felt it
wasn't getting enough for its large stake.
There was also a clash of corporate cultures, for years.
Industry veteran Carlos Ghosn headed both companies
and was able to smooth out differences
with his forceful personality.
But when Ghosn was arrested
in Japan over financial charges in 2018, tensions
between Renault and Nissan spilled out into the open.
He denies the charges and eventually fled the country.
- When you took Carlos Ghosn out of the equation
there was no real good way for these companies to cooperate.
And you realize actually what Ghosn had been doing
for so many years was refereeing some kind of catfight.
- [Narrator] Then came further challenges.
- Covid supply chains and we have a geopolitical situation.
Make the material cost and the hike
and the cost is going to the sky rocket situation.
- [Narrator] Renault had to sell its majority stakes
in Russia's biggest automaker.
After the Ukraine war broke out
it capped off more than two years of losses.
- Two years and a half ago, we were really in a bad shape.
You know, we lost like 8 billion in Euro in a semester.
So that was like, - Wow.
So we lost 600 billion and that's red.
- [Narrator] Amid the crisis.
Renault CEO thought there was also an opportunity
for the French car maker to reinvent itself.
- And all the things we are doing are first to make sure
that Renault, you know,
on the next Grand Prix will be better positioned
because it will be different rules,
different technical setup, et cetera.
But it's never done against the, you know
the alliance or against Nissan.
In fact, they can take advantage some of our experience.
I think also, and vice versa.
- It became clear to both sides.
They'd be better off
operating more independently of each other.
- We had a many things in the past, right?
But we are not doing this like for sake of the rebalancing
or you know Nissan victory, Renault victory
on the historical items.
- Think we have to sometimes go back to the original spirit
which was a very, very pragmatic collaboration.
That's what we tried to do
- [Narrator] Under the new agreement.
Renault will reduce its stake in Nissan from 43% to 15%.
Nissan will also invest
in Renault's electric vehicle and software business.
- They can keep cooperating on certain things
if they want and if both parties see the benefit
or they can go and seek other partners
if they think they can get a better deal.
- My focus is of course is creating
the uniqueness of Renault.
That needs to be different from Nissan.
They have to have a different strategy from us.
It's good.
- So we cannot really do the business in extension
from the past way for the future because the
circumstance is totally different.
This is why we made this announcement to go into
the next ear and what kind of the governance
that we should have in the partnership or structure.
- [Narrator] The deal comes as both companies
look to new types of partnerships and batteries.
EV technology and software.
The chip maker Qualcomm has already said it
would take a stake in Renault's new EV business on par
- On par is a very reasonable investment
with a very strong return on the capital location
for Nissan or for any investor
with very good products that people are willing to
you know, pay for.
This is a chance that many other newcomers coming
from the outside don't have.
- [Narrator] Renault and Nissan have said their alliance
will continue and announce joint projects
in markets such as Argentina, Mexico, and India.
- We are setting up the new stage
for the alliance, how to collaborate, how to work
and if there's opportunity, why not?
- [Narrator] But several issues remain open.
Nissan did not say how much it would invest
in Renault's EV company.
Also under negotiation is the intellectual property
that goes into that Renault venture, which is owned
by Nissan.
- This is also why it's difficult for investors
because there are still some negotiations to take place.
This isn't like the complete end of the story.