By Daniel Leussink and Gilles Guillaume
TOKYO/PARIS (Reuters) -Nissan will invest up to $663 million in Renault (EPA:RENA)'s new electric vehicle unit, the automakers said on Wednesday, as they finalised terms of their restructured partnership after months of negotiation clouded by tension.
Sealing the deal is likely to be seen as a positive. Talks between the two had dragged on months longer than expected, Reuters has reported, due in part to Nissan (OTC:NSANY)'s concern about protecting its intellectual property in future collaborations.
The agreement now frees up both companies to focus on the more pressing problem of navigating the fast-changing industry landscape. For Nissan, that means contending with an increasingly grim outlook for foreign automakers in China, the world's biggest car market.
The Japanese automaker said China remained a challenge after reporting that it nearly doubled first-quarter profit, and lifted its full-year outlook, helped by a weaker yen, and better sales in Japan and North America.
CEO Makoto Uchida told a briefing he expected the earnings recovery in the world's second-largest economy to take some time, adding Nissan would give more details on a new line-up for the Chinese market by autumn.
"Unfortunately, our sales outlook is now falling far below our production capacity," he said of China, adding that he had he recently visited the country and held talks with joint venture partner Dongfeng Motor Group.
Chinese auto brands are on track to account for just over 50% of the cars sold in their home market this year thanks to a growing dominance in electric vehicles, consultancy AlixPartners said this month.
AMPERE INVESTMENT
Nissan said it would invest up to 600 million euros ($663 million) in Renault's electric vehicle unit, Ampere. Renault, meanwhile, will lower its stake in Nissan to 15% from around 43%, putting their relationship on equal footing.
The investment in Ampere is consistent with Nissan being a strategic investor and securing a board seat on the new company, Nissan said.
Questioned on how many members the board will have, a Renault spokesperson replied it had not yet been fully decided.
Sources have said Ampere could be valued at up to 10 billion euros. Nissan had flagged in February that it would invest a maximum 15% in Ampere, but the exact size of its stake remained unclear.
U.S. chip giant Qualcomm (NASDAQ:QCOM) has already said it will invest in Ampere, and Nissan and Renault's junior partner, Mitsubishi Motors (OTC:MMTOF), has said it wants to decide about any potential investment before the unit's initial public offering, which could happen during the first half of 2024.
The companies said the overhaul was subject to regulatory approvals and completion was expected in the fourth quarter of 2023.
($1 = 0.9053 euros)