Daimler and Renault set to partner on small cars

French carmaker Renault was expected Tuesday to approve a new partnership with Germany's Daimler to exchange capital and to share know-how in building smaller cars.

Daimler and Renault set to partner on small cars
Photo: DPA

France’s number two carmaker convened a meeting of its board of directors in Paris to “decide on a new partnership with Daimler,” French Industry Minister Christian Estrosi told a news conference.

According to reports, Renault and Daimler, the manufacturer of the luxury Mercedes-Benz brand, have reached a deal to take three percent stakes in each other and work together to develop small cars and engines.

Japanese automaker Nissan, which is 44.3 percent owned by Renault, will also reportedly take part in the new tie-up and a formal announcement was expected on Wednesday.

A Renault spokesman refused to confirm the plan.

The global auto sector is struggling to overcome a slump caused by the economic downturn and is joining forces to share technology and reduce costs.

German industry experts think that, by cooperating with Renault, Daimler could make savings of €600 million in its development sector.

Estrosi said a senior official from the economy ministry, Luc Rousseau, was attending the meeting. The French state has a 15-percent stake in Renault.

“I can confirm that we approve of this partnership and that our representative will defend the state’s industrial strategy,” said Estrosi.

Renault shares were up 2.55 percent at €36.40 in lunchtime trading Tuesday in Paris on news of the partnership with Daimler. Daimler was up 0.27 percent at €35.50 in Frankfurt.

The deal would be a “win-win situation” for the two firms, said Philippe Barrier from Societe Generale Cross Asset Research.

It would allow Daimler to buy technology at good prices while Renault and Nissan could share the cost of research and development for bigger models with the German partner, said Barrier in a research note.

The agreement provides for exchanges of engines and technology, sharing car parts and production platforms for future Smart models, and developing electric cars, said Guillaume Angue, analyst with CM-CIC Securities.

Despite poor sales for its Smart brand of minicars, Daimler envisions a turnaround by sharing parts with automakers that have strength in small vehicles, Japan’s Nikkei business daily reported.

Renault and Nissan are developing an extensive line of zero-emission electric vehicles, including Nissan’s Leaf, while Daimler could contribute its robust diesel engines for luxury cars and trucks.

Renault, maker of the popular Clio mini-car, entered into an alliance with Nissan 11 years ago to share car parts and open up access to production sites worldwide.

Nissan for instance builds Renault Sandero hatchbacks at its plant in South Africa while Renault builds Nissan models in Brazil. The two carmakers have built a joint plant in India.

Renault, Nissan and Daimler had combined sales of 7.22 million vehicles in 2009, trailing the 8.6 million units for the alliance between Volkswagen and Japan’s Suzuki and the 7.81 million vehicles sold by Toyota.

Volkswagen, the biggest European car maker, and Suzuki finalised a cross-shareholding operation last year.

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From lizards to water, eco-bumps snag Tesla’s giant Berlin car factory

In the green forest outside Berlin, a David and Goliath-style battle is playing out between electric carmaker Tesla and environmental campaigners who want to stop its planned "gigafactory".

From lizards to water, eco-bumps snag Tesla's giant Berlin car factory
Tesla's gigafactory outside the doors of Berlin. dpa-Zentralbild | Patrick Pleul

“When I saw on TV that the Tesla factory was going to be built here, I couldn’t believe it,” said Steffen Schorch, driving his trusty German-made car.

The 60-year-old from Erkner village in the Berlin commuter belt has become one of the faces of the fight against the US auto giant’s first European factory, due to open in the Brandenburg region near Berlin in July.

“Tesla needs far too much water, and the region does not have this water,” said the environmental activist, a local representative of the Nabu ecologist campaign group.

Announced in November 2019, Tesla’s gigafactory project was warmly welcomed as an endorsement of the “Made in Germany” quality mark – but was immediately met with opposition from local residents.

Demonstrations, legal action, open letters – residents have done everything in their power to delay the project, supported by powerful
environmental campaign groups Nabu and Gruene Liga.

Tesla was forced to temporarily suspend forest clearing last year after campaigners won an injunction over threats to the habitats of resident lizards and snakes during their winter slumber.

READ MORE: Is Germany’s Volkswagen becoming ‘the new Tesla’ as it ramps up e-vehicle production?

And now they have focused their attention on water consumption – which could reach up to 3.6 million cubic metres a year, or around 30 percent of the region’s available supply, according to the ZDF public broadcaster.

The extra demand could place a huge burden on a region already affected by water shortages and hit by summer droughts for the past three years.

Local residents and environmentalists are also concerned about the impact on the wetlands, an important source of biodiversity in the region.

Tesla Street

“The water situation is bad, and will get worse,” Heiko Baschin, a spokesman for the neighbourhood association IG Freienbrink, told AFP.

Brandenburg’s environment minister Axel Vogel sought to play down the issue, saying in March that “capacity has not been exceeded for now”.

But the authorities admit that “the impact of droughts is significant” and have set up a working group to examine the issue in the long term.

The gigafactory is set to sprawl over 300 hectares – equivalent to approximately 560 football fields – southwest of the German capital.

Tesla is aiming to produce 500,000 electric vehicles a year at the plant, which will also be home to “the largest battery factory in the world”,
according to group boss Elon Musk.

In a little over a year and a half, swathes of coniferous forest have already been cleared to make way for vast concrete rectangles on a red earth base, accessed via the already iconic Tesla Strasse (Tesla Street).

German bureaucracy

The new site still has only provisional construction permits, but Tesla has been authorised by local officials to begin work at its own risk.

Final approval depends on an assessment of the project’s environmental impact – including the issue of water.

In theory, if approval is not granted, Tesla will have to dismantle the entire complex at its own expense.

But “pressure is being exerted (on the regulatory authorities), linked to Tesla’s significant investment”, Gruene Liga’s Michael Greschow told AFP.

In early April, Tesla said it was “irritated” by the slow pace of German bureaucracy, calling for exceptions to the rules for projects that help the environment.

Economy Minister Peter Altmaier agreed in April that his government “had not done enough” to reduce bureaucracy, lauding the gigafactory as a “very important project”.

Despite Germany’s reputation for efficiency, major infrastructure projects are often held up by bureaucracy criticised as excessive by the business community.

Among the most embarrassing examples are Berlin’s new airport which opened last October after an eight-year delay and Stuttgart’s new train station, which has been under construction since 2010.

Brandenburg’s economy minister, Joerg Steinbach, raised the possibility in February that the Tesla factory could be delayed beyond its July planned opening for the same reason.

SEE ALSO: Tesla advertises over 300 jobs for new Gigafactory near Berlin