The Renault-Nissan Alliance: How the global leader in electric vehicles is combating climate change

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Environmental regulations and standards on the auto industry range from areas such as CO2 and exhaust emissions to fuel efficiency and water usage. Because these regulations are becoming stricter every year and consumer demand for more environmentally friendly vehicles is rising, the Renault-Nissan Alliance continues to innovate to mitigate climate change.

What is the Renault-Nissan Alliance?

Formed in 1999, the Renault-Nissan Alliance is a uniquely structured partnership between two of the world’s major carmakers based on cross-shareholding. Renault holds a 43.4% stake in Nissan and Nissan holds a 15% stake in Renault. The France-based Renault and the Japan-based Nissan sell cars worldwide through eight brands – Renault, Nissan, Renault Samsung, Infiniti, Venucia, Dacia, Datsun and Lada. Stewarded by Chairman and CEO Carlos Ghosn, the two have combined revenues of €129 billion, around 10% of the global market for auto sales [1].

Driving for zero emissions

With about 95% of automotive transport relying on petroleum-based fuels and the sector contributing to 17% of CO2 emissions [2], Renault and Nissan have focused on reducing emissions. Keeping the United Nations Framework Convention on Climate Change’s commitment to preventing global average temperatures from rising more than two degrees Celsius in mind, Nissan established its vision for reducing well-to-wheel CO2 emissions from new vehicles (i.e. over the full life cycle of a vehicle) by 90% by 2050 [3]. Renault was also the first carmaker to make a public environmental commitment to shrink its global carbon footprint [4].

In their October report, CDP, a non-profit organization representing over 800 institutional investors with $100 trillion of assets, listed Renault and Nissan on their 2016 Climate A List, a group of companies identified as A-grade for their actions to mitigate climate change [5]. Nissan was recognized for its two-part vision to reduce emissions: (1) short term technological improvements that make its internal combustion engines more efficient; and (2) its long term focus on increasing the adoption of zero-emission electric vehicles (EVs) [6].

Renault was not only awarded for its success in reducing emissions by over 17% in the last six years, but also for the inclusion of a carbon footprint decrease in the company’s strategic and operating plan [7]. Renault is also committed to the idea of supporting the circular economy of EVs; for example, by leasing the batteries, it is easier for the company to find ways to reuse them after their efficacy in cars decreases [8].

The Alliance has been focused on the future of EVs since the introduction of its best-selling Nissan Leaf in 2010. With over 350,000 sold, all of the Alliance’s EVs account for about half of EVs on the road today [9]. In December 2015 the Alliance partnered with the 21st United Nations Climate Change Conference (COP21) and provided 200 EVs for the delegates. The Alliance will do the same for COP22 in Morocco, which starts next week [10]. In addition to this partnership, the Alliance was one of thirteen auto companies to publicly pledge to de-carbonize auto transport during COP21 [11].

Time to turn over a new Leaf?

Government incentives and access to EV charging infrastructure are two of the main drivers of EV adoption. Alliance Chairman and CEO Carlos Ghosn has been vocal about both of these issues. In the October 2016 Harvard Business Review, he said that he believes recharging infrastructure is developing slowly, hurting consumer adoption of EVs, and that public-private partnerships are necessary for development [12]. Progress has been made as recently as this week with the White House announcing actions to accelerate EV adoption and charging infrastructure through the designation of forty-eight EV charging highway corridors in partnership with vehicle manufacturers, including Nissan [13]. However, swift progress needs to be made globally in order to increase the proliferation of EVs.

In order to bridge the current gap between demand for gasoline-powered cars and EVs, the Alliance will sell hybrid electric cars powered by small gasoline generators to alleviate consumer concerns around the lack of charging stations. At the moment, this will only be in Japan, but Ghosn said that this could be feasible in Europe as well [14]. In addition, Nissan recently completed its purchase of a $2 billion controlling stake in Mitsubishi Motors. Ghosn will take on the position of Chairman and oversee Nissan and Mitsubishi’s plans to exchange technologies, like Mitsubishi’s gas-electric hybrid system, and cut costs [15]. Hopefully the Alliance will use what is now an even bigger platform to partner with governments to increase EV infrastructure, increase EV use and combat climate change.

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[1] Alliance Facts & Figures 2016, from Renault-Nissan Alliance website, http://blog.alliance-renault-nissan.com/sites/default/files/facts_figures_2016_gb_8%20(1).pdf, accessed October 2016.

[2] World Economic Forum, “CEO Climate Leadership for Automotive,” downloaded from WEF website, http://www3.weforum.org/docs/Media/WEFUSA_CEOClimateLeadershipforAutomotiveDeclaration.pdf, accessed November 2016.

[3] Sustainability Report 2016, from Nissan website, http://www.nissan-global.com/EN/DOCUMENT/PDF/SR/2016/SR16_E_All.pdf, accessed October 2016.

[4] “Groupe Renault’s low-carbon endeavours earn aware from international organization CDP,” press release, October 26, 2016, on Renault-Nissan Alliance website, http://blog.alliance-renault-nissan.com/blog/groupe-renaults-low-carbon-endeavours-earn-award-international-organization-cdp, accessed November 2016.

[5] CDP, “Out of the starting blocks – tracking progress on corporate climate action,” downloaded from CDP website, https://www.cdp.net/es/reports/downloads/1233, accessed November 2016.

[6] “Nissan recognized for sustainable leadership by the CDP Climate Change Report for the third straight year,” press release, October 25, 2016, on Renault-Nissan Alliance website, https://blog.alliance-renault-nissan.com/blog/nissan-recognized-sustainable-leadership-cdp-climate-change-report-third-straight-year, accessed November 2016.

[7] “Groupe Renault’s low-carbon endeavours earn aware from international organization CDP,” press release, October 26, 2016, on Renault-Nissan Alliance website, http://blog.alliance-renault-nissan.com/blog/groupe-renaults-low-carbon-endeavours-earn-award-international-organization-cdp, accessed November 2016.

[8] The second life of a battery, from Renault website, https://group.renault.com/en/commitments/environment/cop21-en/, accessed November 2016.

[9] “Renault-Nissan Alliance named official COP22 passenger car partner with zero-emission fleet,” press release, May 10, 2016, on Renault-Nissan Alliance website, http://blog.alliance-renault-nissan.com/content/renault-nissan-alliance-named-official-cop22-passenger-car-partner-zero-emission-fleet, accessed November 2016.

[10] Ibid.

[11] Alex Molinaroli, “Why the global auto industry is stepping up to the climate change challenge,” World Economic Forum, December 10, 2015, https://www.weforum.org/agenda/2015/12/why-the-global-auto-industry-is-stepping-up-to-the-climate-change-challenge/, accessed October 2016.

[12] Adi Ignatius, “’Making the Car a Mobile, Connected Workspace’: An Interview with Carlos Ghosn,” Harvard Business Review, October 2016, https://hbr.org/2016/10/making-the-car-a-mobile-connected-workspace, accessed November 2016.

[13] “Obama Administration Announces New Actions to Accelerate the Deployment of Electrical Vehicles and Charging Infrastructure,” press release, November 3, 2016, on White House website, https://www.whitehouse.gov/the-press-office/2016/11/03/obama-administration-announces-new-actions-accelerate-deployment, accessed November 2016.

[14] Laurence Frost, Gilles Guillaume, “Renault-Nissan’s Ghosn says mini-hybrids could compete in Europe,” Reuters, November 3, 2016, http://www.reuters.com/article/us-renault-nissan-hybrids-idUSKBN12Y23M, accessed November 2016.

[15] Source: Sean McLain, “Nissan Formally Takes Controlling Stake in Mitsubishi Motors; Carlos Ghosn is taking the chairman’s role at Mitsubishi,” The Wall Street Journal, October 21, 2016, via Factiva, accessed November 2016.

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3 thoughts on “The Renault-Nissan Alliance: How the global leader in electric vehicles is combating climate change

  1. I was not aware of the degree to which Nissan and Renault partnered – and the impetus behind the partnership – before reading this post. I really value the conversation Ashwini articulated around the importance of public sector-private sector cooperation and partnership in effectively mitigating the effects of climate change. It appears that Nissan and Renault have strategically leveraged their relative sizes in the market and first-mover advantages in climate change adaptation to influence other car makers and the government to make moves. To further push this discussion point, I am curious if Nissan and Renault believe that the pace at which they are working to put more EV cars on the road worldwide will ultimately match the accelerating impact of climate change on the global ecosystem. My guess here is that Nissan and Renault are immensely aware that they are playing catch up to the irreversible effects global warming has already had on the environment, leading to their multi-pronged approach, and stake purchase in Mitsubishi Motors. But do we see any areas where they could do more to accelerate their own ability to catch up with climate change impacts, beyond what they’re already doing? I believe that they’re work in emerging markets, especially, presents them with an incredible opportunity to drive legislation and public governance standards around car emissions. As big players in the market, Nissan-Renault-Mitsubishi will have substantial bargaining power in these markets. Knowing emerging economies are typically the highest carbon emitters, the triad has the potential to make substantial impacts across the board in regulation and emission standard adoption.

  2. Thanks for the great post, Ashwini! I had no idea that Nissan-Renault had taken such a leadership position in the move to EVs.

    I think the point you bring up about the infrastructure needed to support EVs is a good one. However, I would even go a step further to say that in addition to adding new charging stations to increase the viability of EVs for consumers, regulators need to be prudent about the potential strain that EVs, unchecked, could put on the vastly inflexible, out-of-date electric grids that most countries (especially the US) have. The proliferation of EVs will necessarily increase the amount of electricity transmitted and consumed from the grid. This influx, if not appropriately managed through new tariff structures and other incentives, has the potential to exacerbate supply/demand imbalances, and possibly increase our dependence on dirty fossil fuels. If the majority of charging occurs at the same time, peaking CHPs may need to be spun up to meet the demand, which is neither cost effective nor particularly green. There are ways to avoid that however, if regulators and utilities are able to put in place the right tariffs to incentivize charging during off-peak times or hours when the EVs can absorb excess wind/solar power that is otherwise hard to store and transmit.

  3. Hey Ashwini, thanks for the post. As a big fan of Renault-Nissan and Carlos Ghosn (he was our role model in the Japanese acquisition I worked on), it’s great to know more about what they’re doing regarding climate change — not only in their car line-up but also in their internal operations. I think Phoebe makes a great point about the huge opportunity that a brand like Nissan or Renault have to scale EVs across the globe, especially in developing nations. While Tesla has, arguably, a superior EV product, the infrastructure that Renault-Nissan have globally, in terms of manufacturing, distribution, sales, and service, makes them uniquely positioned to move the needle in automobile carbon emissions. I suppose the next question, then, would be: when will it happen? After a cursory look at the Nissan Leaf website, it appears the Leaf has not been truly updated for several years. Tesla continues to invest in EV R&D despite a lacking charging station network; is Renault-Nissan doing the same?

    Finally — Maria brings up such an important point…it would be great to know more about what solutions are available to avoid the situations mentioned!

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