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Fiat/Renault Marriage On The Rocks, Subaru Cozies Up To Toyota On Electric Cars

The marriage between Fiat Chrysler and Renault is off. An engagement between Subaru and Toyota is on. It’s a crazy time in the global auto business.

Well that didn’t take long. Just last week, Fiat Chrysler was hot to get into bed with Renault, but now it says the engagement is off. Let the blame game begin!

Fiat Chrysler Renault

According to The Guardian, the proposed marriage foundered because the French government, which owns 15% of Renault shares, wanted assurances that the merger would not lead to the closure of factories in France and the layoff of French workers. The government wanted more time to assess the impact of the deal on French national interests. Not gonna happen, Fiat Chrysler responded, and things went downhill from there.

France’s finance minister, Bruno Le Maire, says the government engaged constructively with all partners in the negotiations but that agreement had not been reached on all the government’s conditions for a deal. “What remained to be obtained was the explicit support of Nissan.” The Japanese automaker also owns 15% of Renault, giving it equal status on the board with the French government.

Le Maire told the press on June 5 there was no need to rush through a deal, saying the government wanted guarantees over Renault jobs, a headquarters in Paris, and corporate governance. “We want to do this merger,” he told BFM TV. For its part, Fiat Chyrsler says it “remains firmly convinced of the compelling, transformational rationale of  the proposal.”

So FCA wants to move ahead, the French government wants more time to do its due diligence, and nobody really knows where Nissan stands in all this. There are suspicions that Nissan was behind the arrest and incarceration of Renault Group CEO Carlos Ghosn as a way to gain leverage in a strategy to restructure its arrangement with Renault.

There may be a deal here yet at the parties pirouette and posture for the cameras. FCA desperately needs help getting on board with the EV revolution after a decade of pinning its hopes on the continued sales of Jeeps and pickup trucks, neither one of which sells very well outside of the US.

Toyota & Subaru To Cooperate On EVs.

Elon Musk and Tesla have certainly lit a fire under the automobile industry. After BMW and Jaguar Land Rover announced this week they will work together to develop powertrains for electric vehicles, Toyota and Subaru say they will do the same. “Subaru and Toyota believe that it is necessary to pursue a business model that goes beyond convention, crossing over industrial boundaries,” the automakers said in a joint statement. They will develop a new electric SUV together, one that builds on Subaru’s well known all wheel drive expertise and Toyota’s electrification skills, according to a report by CNBC.

Wait. What? Subarus use a mechanical drivetrain, which has no application to electric cars and Toyota is still heavily invested in hybrids and fuel cell technology. Perhaps the new car features a Subaru piston engine and drivetrain married to a Toyota Prius battery and a fuel cell range extender? Nah, that’s crazy talk…..isn’t it?

The two companies have collaborated before on a sports car that is known as the Toyota 86 or the Subaru BRZ. It was jointly developed by both companies and is highly regarded by sports car aficionados, yet combined sales have been modest, to say the least. Toyota owns 16.77% of Subaru at present.

The capital costs of developing electric cars are enormous, which is driving many existing car companies into each other’s arms in order to better manage those costs. Industry analysts like to jump up and down and slam Tesla for not being profitable, but the truth is the entire auto industry is experiencing an enormous upheaval as emissions standards ramp up everywhere in the world (except the US) and sales of conventional cars decline. Look for more convergence between existing companies going forward.

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Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. 3000 years ago, Socrates said, "The secret to change is to focus all of your energy not on fighting the old but on building the new." Perhaps it's time we heed his advice.


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