Renault and Nissan alliance comes unstuck without Ghosn’s glue

Since his 2018 arrest, imprisonment and Lupin-esque escape from the clutches of Japanese justice, a favourite assessment of Carlos Ghosn is that he was the glue that held together the Renault-Nissan automotive alliance for nearly two decades.

The analogy works pretty well. In addition to his skills as a businessman, he undoubtedly had strong glue-like attributes — alternately viscous and rigid, a go-to fixer for fissures, and an effective binder of surfaces that would fall apart if left to gravity.

After the companies held emergency talks on reshaping the alliance for the electric vehicle era, it is starting to look as if it could benefit from any fixative, even — and perhaps most usefully — an elastic band. It has been a long while since the once-pioneering Renault-Nissan alliance was something other than a cautionary tale. Finally, it may produce a positive lesson for the global industry.

The talks, for which Renault chief executive Luca de Meo flew to Japan earlier this month were painfully overdue. And while the fundamental reasons things are so bad are complex, the Ghosn-as-glue metaphor has become the most easily grasped narrative of the past four years because, in the former supremo’s absence, things have clearly become unstuck.

Quite apart from the financial miseries reported by both companies, the alliance has crawled towards what looks a lot like a state of partnership in name only. Executives in both Paris and Yokohama privately describe a near-dysfunctional working relationship on existing joint projects and a mutual suspicion that makes any new ones seem implausible. Despite this, the alliance has set itself up for a monumental series of stress tests as it attempts to reimagine the whole marriage as a challenger to Tesla.

In this dire situation, though, a way forward has presented itself. Renault, after two years under the more pragmatic leadership of de Meo, needs investment from Nissan on an electric vehicle venture, and formal permission to transfer technology to a combustion engine joint venture with China’s Geely.

Nissan, meanwhile, sees these requests as a golden opportunity to secure an end to the imbalance at the heart of the relationship. Renault holds a 43 per cent stake and voting rights in its larger Japanese partner, which in turn holds only 15 per cent and no voting rights in the French company. Nissan’s proposal, say people close to the discussions, is that the mutual stakes be equalised at 15 per cent.

The imbalance — increasingly loathed by Nissan as a reminder of the bailout that resulted in the existence of the large stake held by Renault and a mechanism for what it sees as ongoing exploitation by its partner — was the primary stress point that required all that glueing from Ghosn.

Since word of the talks emerged, some analysts have taken it as a positive sign. There are numerous obstacles to agreement, but the most likely alternative is that the alliance falls apart just when both companies — along with the third alliance partner Mitsubishi — need it more than ever. If a rebalancing of the stakes is accompanied by a new, transparent version of the master agreement that underpins the alliance, there is at least a possibility of the Franco-Japanese behemoth muddling along.

The problem, grumble Nissan executives, is that particularly on the matter of intellectual property, Ghosn behaved as if the groups were bonded by something much stronger than they really were. IP was liberally shared as a currency of goodwill within an alliance unable to mint much of that in other ways. That has left things more blurred than they might ideally be when spin-off ventures and deals require the individually and co-owned IP to be teased apart and as the alliance moves ahead with the €23bn electrification plans announced in January.

The difficulty created by the Ghosn-era IP regime, say people close to both Nissan and Renault, is that while the alliance will always demand a certain level of loyalty, success in the electric vehicle era will only happen if both partners acknowledge that they need an open relationship. The electrification of cars (in particular the transformation of vehicles into mobile software platforms), the evolution of battery technology and the phasing-out of internal combustion models will require a great deal of rapid partnership formation, and IP sharing, with parties outside the alliance. Renault appears on track, for example, to deepen its relationship with Google.

The false appeal of the Ghosn-glue imagery is that it depends on the idea of a magic binder — the missing ingredient between the success of the alliance and the mess it is now in. The reason a rebalancing of the stakes is so vital is that it will symbolically reset thinking on what this relationship could be. If it ever really needed glue, what the alliance most clearly needs now is greater flexibility.

leo.lewis@ft.com