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Nissan to buy up to 15 per cent stake in Renault EV unit under reshaped alliance

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Nissan (7201.T) and Renault (RENA.PA) on Monday unveiled details of their redesigned alliance, with the Japanese car maker committing to buy a stake of up to 15 per cent in Renault’s electric vehicles unit Ampere.

The alliance junior partner Mitsubishi Motors (7211.T) will also consider investing in Ampere, which Renault aims to list, the companies said in a statement.

“Nissan’s intention is to invest up to 15 per cent in Ampere, Renault Group’s EV & Software entity in Europe, with the aim to become a strategic investor,” the statement said ahead of a presentation in London.

The companies had already announced that under the deal to revive their long-standing alliance the French carmaker would reduce its stake in its Japanese partner to 15 per cent from around 43 per cent now.

Renault will transfer 28.4 per cent of Nissan shares into a French trust, making the two more equal partners in the alliance.

Sources close to the matter said the agreement aimed to make the alliance freer and more balanced for the next 15 years.

The partnership will produce synergies from joint projects in Europe, India and Latin America, and the companies will work together in Renault’s flagship EV business, electronics and solid-state batteries.

Renault will have flexibility to sell the Nissan shares held in the trust but “it has no obligation to sell the shares within a specific pre-determined period of time,” the statement on Monday said.

When it does sell, “Nissan would benefit from a right of first offer, to its or the benefit of a designated third party.”

The two companies last month announced a sweeping remake of their 24-year-old automaking alliance, which was thrown into disarray by the ouster of its architect and former chairman, Carlos Ghosn, amid financial scandal.

That announcement came after nearly four months of intense talks complicated by concerns about the sharing of intellectual property as Renault sought tie-ups with companies outside their alliance.

Renault’s board approved the deal on Sunday night, according to a source. Nissan’s board also approved it early on Monday, the source said.

Investors and analysts will be looking for more clarity on how the trust in which Renault will place the bulk of its Nissan stake will operate.

“There is absolutely no word about what’s going to happen to those shares in the trust,” said CLSA analyst Christopher Richter. “It seems they’re all avoiding the issue of Nissan buying them back which I think would be the best thing for all parties involved.”

Richter said Renault’s brand is not seen as being a strong brand, so it may be tough for the French carmaker to raise money for Ampere.

“I wonder once this thing goes into the market how much money you would really raise, he said. “That’s why I think they’re going to push Nissan to pay too much.”

The unequal relationship between the two carmakers had long been a source of friction among Nissan executives.

While Renault bailed out Nissan two decades ago, it is the smaller automaker by sales.

CLSA’s Richter said that the revamped alliance could enable Nissan and Renault to work together on R&D, shared costs and a few shared products “with a little bit less rancor and acrimony between them,” but added that Honda (7267.T) and General Motors (GM.N) have built a partnership that includes jointly developing lower-cost EVs together without any need for a capital relationship.

“One almost wonders what’s the point of them having any stake in either one, any stake at all,” Richter said.

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