The French-Japanese auto alliance of Renault, Nissan and Mitsubishi Motors Corp will invest $26 billion in electric vehicles (EVs) over the next five years to keep their competitive edge in the switch to cleaner driving, the companies said on Thursday, marking the latest massive cash injection into the fast-growing electric cars sector by the auto industry.
They also said that will work more closely together to make electric cars stay competitive in the switch to cleaner driving.
The two-decade-old alliance, which also includes Mitsubishi Motors, said it would increase the number of common platforms for EVs to five from four.
Nissan, Renault and Mitsubishi Motors said the latest outlay followed $11 billion already spent on its "offensive strategy in electrification," promising 35 new electric models by 2030.
They will build a combined EV line-up of 35 vehicles by 2030, the companies said, adding that by 2026 four-fifths of their models would share common platforms, up from 60% now.
Nissan Motor Co. will lead in developing a next-generation battery for EVs, while Renault will lead in developing electronics and software to connect millions of vehicles and provide digital services and features.
"The alliance will hold its place among the world automotive leaders," Jean-Dominique Senard, the alliance's operating chairperson of the board said during an online presentation.
"Today we are lifting the hoods of the alliance together," he added.
But it faces competition from bigger carmakers with deeper pockets, such as Toyota Motor, which in December pledged to spend $70 billion to electrify its fleet, as well as EV specialists such as Tesla Inc.
Now the world's most valuable automaker, Tesla forecast on Wednesday its deliveries in 2022 would grow 50% year on year.
Asked whether the EV spending plan was enough, given it is only around half what Germany's Volkswagen AG plans to invest in the technology, Renault Chief Financial Officer Clotilde Delbos said it was "sufficient," given the alliance's past experience in making EVs.
"We are not a second division player when we come together," Renault CEO Luca de Meo said during the presentation.
Automakers around the world are trying to save costs and forge alliances. Recent COVID-related supply problems that are crimping production and growing concerns about climate change have made such coordination more urgent than ever.
Sharing components, production facilities and research will benefit the Renault-Nissan-Mitsubishi alliance, said Nissan Chief Executive Makoto Uchida.
"More than anything, we also benefit from the shared experience and expertise of our people," said Uchida.
Scale
To power the new EVs, the trio said they planned to secure 220 gigawatts hours (GWh) of battery production capacity by 2030, providing a greater scale that would allow them to halve battery costs by 2026 and reduce them by 65% by 2028. They did not give details on how the capacity would be secured.
The money promised on Thursday comes from funding announced last year.
In June, Renault unveiled a five-year 10 billion euro ($11.15 billion) EV strategy with a plan to launch 10 models and to have EVs account for 90% of all models by 2030.
Nissan said in November it would spend 2 trillion yen ($17.6 billion) over five years to accelerate vehicle electrification, including on EVs and hybrid gasoline-electric cars.
Japan's No. 3 carmaker plans to launch 23 electrified vehicles by 2030, including 15 pure EVs. It has also said it wants to reduce lithium-ion battery costs by 65% within eight years and introduce potentially game-changing all-solid-state batteries by March 2029.
Nissan said on Thursday it planned to replace its Micra car in Europe with a new EV using one of the common platforms.
Holding the three-way alliance together is a cross-shareholding relationship, with Renault owning 43.4% of Nissan, which in turn has a 15% non-voting stake in the French car company and a third of Mitsubishi Motors' stock.
Senard declined to comment when asked whether the partners might rebalance the relationship by changing those holdings.
A new structure has been expected by financial markets. Renault has been in the dominant position since it bailed out Nissan two decades ago, but is now smaller by sales than its Japanese partner.
"Life is long and we should never be impatient on that kind of subject," said Senard.
Renault owns 43.4% of Nissan, while Nissan owns 15% of Renault. Nissan, based in the port city of Yokohama, owns 34% of Tokyo-based Mitsubishi. The French government owns 15% of Renault.
The alliance is the brainchild of Carlos Ghosn, sent in by Renault in 1999 to turn around a near-bankrupt Nissan. Ghosn made it one of the most successful auto groups in the world. But he was arrested in Japan in 2018 on financial misconduct charges.
He jumped bail and fled to Lebanon in late 2019. Lebanon has no extradition treaty with Japan. Ghosn says he is innocent.
Ghosn's arrest and related developments strained the alliance, and Senard referred to a crisis, without going into details. He blamed a "lack of trust," which he said was getting fixed.