Renault's Bold Move: Restructuring Alliances to Outrun Chinese Rivals and Foxconn's Ambitions

Renault's $11 billion write-down of its stake in Nissan, announced in June 2025, marks a pivotal moment in the automotive industry's evolution. While the write-off signals a painful rebalancing of the Renault-Nissan-Mitsubishi alliance post-Ghosn era, it also unlocks critical capital and strategic flexibility for Renault to focus on its electric vehicle (EV) ambitions. Meanwhile, Foxconn's emerging partnership with Nissan highlights a new model of industrial collaboration—one that could stabilize Nissan's operations without diluting equity. Yet, both companies face existential risks from Chinese automakers' aggressive dominance and U.S. tariff pressures. Here's why investors should bet on Renault's strategic realignment while approaching Nissan with caution.

1. The Write-Down: A Necessary Evil for EV Dominance

Renault's decision to reclassify its 35.7% stake in Nissan from an equity method investment to a financial asset at fair value triggered a non-cash loss of €9.5 billion. While this stings in the short term, it's a calculated move to free capital for its Ampere EV division. By shedding reliance on Nissan's declining conventional car sales (down 88% in FY2024), Renault can pivot resources to its electrification roadmap, including launches like the Renault 4 E-Tech and Dacia Bigster.

This restructuring also rebalances the Renault-Nissan-Mitsubishi alliance, which has long been strained by operational inefficiencies and governance disputes. The write-down reduces Renault's exposure to Nissan's financial struggles—such as its 20,000 job cuts and plant closures—while retaining collaborative projects like joint EV platforms. For investors, the key takeaway is that Renault is repositioning itself as a focused EV player, unshackled from legacy alliances.

2. Foxconn's Role: Tech Collaboration Over Equity Grab

Foxconn's partnership with Nissan offers a lifeline without the risks of equity acquisition. Instead of buying shares, Foxconn is leveraging its manufacturing prowess and EV tech (e.g., battery management systems) to retool Nissan's production. Plans to repurpose the Lordstown, Ohio plant—a failed EV startup site—into a hub for cost-efficient EV production could help Nissan cut costs by 20% and regain competitiveness in North America.

This approach avoids the pitfalls of equity stakes, which could expose Foxconn to Nissan's operational volatility. Instead, it's a win-win: Nissan gains manufacturing scalability, while Foxconn secures a foothold in the automotive sector. For investors, this highlights how alliances, not just capital, can drive resilience.

3. Risks: Chinese Dominance and U.S. Tariff Traps

The elephant in the room is Chinese automakers' stranglehold on global EV markets. By 2025, Chinese brands control 55% of global BEV sales, thanks to vertical integration (e.g., BYD's battery dominance), government subsidies, and aggressive pricing. Renault and Nissan face a stark choice: collaborate or collapse.

• Opportunity: Renault's tie-up with Geely (e.g., the Busan plant for the Grand Koleos) and Nissan's Foxconn partnership show how Western brands can access Chinese tech and scale.
• Risk: U.S. tariffs on imported EV components threaten these collaborations. A $700 million investment by Volkswagen in Xpeng underscores the need to localize production—something Renault and Nissan must prioritize.

Investment Takeaways

Go Long on Renault:
- Why: Its write-down is a one-time hit, freeing capital for the Ampere division. With a robust EV pipeline and a focus on cost discipline (€2 billion free cash flow target), Renault is positioned to outpace rivals in Europe and emerging markets.
- Risk Mitigation: Monitor its progress in electrification (e.g., solid-state battery partnerships) and inventory management.

Stay Cautious on Nissan:
- Why: While Foxconn's tech collaboration could stabilize operations, Nissan's core issues—declining sales, overcapacity, and weak margins—remain unresolved. Its 5% stake sale to fund EVs is a stopgap, not a cure.
- Red Flags: U.S. tariff exposure and reliance on partnerships (e.g., Honda merger talks) add execution risks.

Final Call

Renault's restructuring is a masterstroke for investors seeking exposure to Europe's EV revival. Meanwhile, Nissan's survival hinges on partnerships that avoid equity pitfalls—yet its operational overhaul is far from complete. Actively invest in Renault's strategic pivot, but wait for clearer signs of turnaround in Nissan before diving in.

The automotive industry is entering a Darwinian era. Those who adapt fastest—not just to EVs, but to geopolitical and industrial alliances—will thrive.