Weekly Brief: EV Investment Highlights a Rocky Road for Alliance

Nissan, Renault and Mitsubishi will jointly invest $25.8Bn to create the world’s largest offering of pure electric vehicles by 2030.

The trio plan to lean on each other’s core competencies in what they call a leader-follower model. Nissan will lead the development of breakthrough all-solid-state battery technology to benefit all members. Renault will lead the development of common centralized electrical and electronic architecture, including for autonomous driving. The 2030 roadmap aims to have 80% of alliance vehicles built on one of five common platforms by 2026. If all goes according to plan, the Renault-Nissan-Mitsubishi Alliance will each jointly have 35 EVs on the market by 2030.

“These are massive investments that none of the three companies could make alone,” said Jean-Dominique Senard, chairman of the Alliance. “Together, we are making the difference for a new and global sustainable future; the Alliance becoming carbon neutral by 2050.”

It sure sounds good and, in theory, it’s true. By working together, the three companies become the third largest automaker in the world, a juggernaut that can achieve scale and efficiencies that none of the companies could alone. If you look at battery production, for example, the Alliance says it will build up a total of 220 GWh battery production capacity for EVs across key production sites by 2030, which will allow it to reduce battery costs for all members by more than 65%.

The problem is that in reality the three automakers have the most fraught, dysfunctional, and fractious relationship in the auto industry. Who could forget Carlos Ghosn, former CEO of Nissan and Renault and chairman of Mitsubishi, who single-handedly brought the Alliance together in formidable fashion, only to end up the object of a corporate coup in 2018, accused of a long list of abuses and malfeasance and placed under arrest in Japan. He eventually escaped in a scene reminiscent of a Hollywood action flick: hidden away in a musical instrument case and flown to Turkey, where he now lives with his wife in Beirut and continues to throw verbal rocks at his former companies, including, just this month, calling Nissan “thugs” and the partnership of Renault, Nissan and Mitsubishi the “zombie alliance”.

Ghosn’s ouster nearly broke the Alliance and the pandemic only exacerbated its problems, as sales dropped steeply for all three companies, without the subsequent bounce back that most other carmakers enjoyed. A $25.8Bn pledge may sound impressive but that’s less than the $35Bn General Motors has invested in EVs and AVs between 2020 and 2025. It’s less than the $70BN that Toyota has invested in EVs between now and 2030 and it’s less than the $89Bn that Volkswagen has pledged to EVs in the next five years. It’s also worth mentioning that the new pledge of money from the three carmakers is, actually, just a rehashing of investments that each made last year on its own.

Does this mean that the Alliance’s 2030 roadmap is doomed? Definitely not. Mitsubishi plans to come out swinging with two new EVs based on Renault best-sellers in Europe. Likewise, Nissan unveiled an all-new compact EV to replace the struggling Micra in Europe. The vehicle will be manufactured at Renault ElectriCity, the electric industrial center in Northern France. Paul Myles has some details. If these models do well, they could be early signals that each of the three is stronger together than apart.

However, if things start going sideways for any of the three, the leader-follower model could quickly be thrown into disarray. Don’t be surprised at that point if the harmonious notes of unity from the past week turn to the shrill crashing of glass as the Alliance shatters once and for all.