Renault, Nissan & Mitsubishi Launch $1B Investment Fund

The automotive space has become one of the most exciting sectors for investment in recent months. With electric cars, connected cars and self-driving cars all expected to grow exponentially in the near term, opportunity abounds.

While the potential is enticing to any prospector, automotive companies, whose futures hang in the balance of these outcomes, have proven to be some of the most active investors.

Automakers are uniquely positioned to gauge which EV, AV or connected car startups stand a legitimate chance of succeeding, and they have the resources to make meaningful investments. Plus, having an early stake in companies that could be acquired down the road, adds a valuable asset to their balance sheets.

With that in mind, Renault, Nissan and Mitsubishi are looking to leverage their collective power in the space by forming an investment alliance.

On January 9, the three automakers announced the launch of a new venture capital fund named Alliance Ventures. Co-located in Paris, Yokohama, Beijing and Silicon Valley, Alliance Ventures will invest up to $1 billion over the next five years in “technology and business model innovation” for electric cars, autonomous vehicles, connected cars, and other newly emerging forms of mobility. The fund plans to invest $200 million of that sum in 2018.

“Our open innovation approach will allow us to invest and collaborate with start-up companies and technology entrepreneurs, who will benefit from the global scale of the Alliance,” Renault-Nissan-Mitsubishi chairman and CEO Carlos Ghosn noted in a statement. “This new fund reflects the collaborative spirit and entrepreneurial mind-set at the heart of the Alliance.”

When it launched the fund, Alliance Ventures also revealed its first investment, in Massachusetts battery company Ionic Materials. Along with acquiring equity in the company, Renault-Nissan-Mitsubishi has established a cooperative R&D arrangement with Ionic Materials. The battery maker specializes in designing solid-state, cobalt-free batteries.

“We can fix lithium-ion to be safe and do all the advanced things people want to do. But we can also make [alkaline batteries that are] cheaper and safer and simple to manufacture, and make them rechargeable,” Sun Microsystems founder and Ionic Materials investor Bill Joy told Fast Company last year.

The Renault-Nissan-Mitsubishi Alliance was founded in 1999 as the Renault-Nissan Alliance. In October, Nissan acquired a $2.3 billion, one-third stake in Mitsubishi, which subsequently joined the Alliance. For Alliance Ventures, Renault and Nissan each hold a 40% stake, while Mitsubishi has a 20% stake.

New investment funds focused on the future of the automotive industry have become increasingly popular.

In September, Chinese tech giant and autonomous vehicle developer Baidu and South Korean electronics company Samsung each launched investment funds that targeted AV companies. Two months prior, the VC firm Autotech Ventures closed a $120 million fund with the express purpose of connecting promising automotive startups with investors.

The Renault-Nissan-Mitsubishi Alliance currently accounts for one in nine vehicles sold worldwide. By making strategic investments in promising automotive startups, the Alliance is making a long-term play to widen its slice of that pie.

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