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Fiat Chrysler Automobiles (FCA) recently sent a proposal to Renault to merge the two companies. That’s a sentence no one really expected to see anytime soon, but with everything that’s been going on in the auto industry lately, maybe this is a smart move. If Fiat-Chrysler and French peer Renault, leading the Renault-Nissan-Mitsubishi Alliance were to agree on a “transformative merger”, they’ll become the third-largest automaker in the world – possibly even the largest automotive group with the many brands under each umbrella. If we take a look at some of the major events of the last few years, it’s actually pretty obvious.
Laying the Groundwork
What may be a driving factor behind the recent proposal could be the $1 billion funding campaign by the Renault-Nissan-Mitsubishi Alliance set up to invest in open innovation, start-ups, and entrepreneurs in technology with a focus on autonomous systems, electric vehicles (EVs), connectivity, and artificial intelligence. The Alliance Ventures campaign has already made many strong investments with startups in China and the US, and it doesn’t take a genius to realize the goals of Alliance Ventures are the same as the FCA at the moment.
In the summer of 2018, FCA announced that the automotive group would be bringing alternative fuel vehicles to the lineup over the next couple of years. Fiat-Chrysler going electric means vehicles like the Jeep Plug-in hybrids at the 2019 Geneva Motor Show becoming mainstream. However, as was recently learned in April 2019, FCA is struggling a bit to meet the strict carbon-dioxide emission regulations set by the European Union. To meet these regulations, the FCA teamed up with competitor all-electric automaker Tesla to help bring their CO2 average down. That must sting.
Then there’s also the autonomous car race. Fiat-Chrysler has a large hand in this, with the self-driving Waymo using Chrysler Pacifica Hybrid as the flagship and platform for the current autonomous ride-hailing service Waymo One. Back in late 2016, Apple announced their own autonomous self-driving platform, and in 2017, Mitsubishi Electric unveiled their own self-driving technology that will be popping up in vehicles like the Engelberg Tourer Concept, also at the 2019 Geneva Motor Show. In late 2018, FCA invested $30 million into transforming their Chelsea Proving Grounds Testing Facility to also act as a testing round for autonomous vehicles one day set for retail.
So a lot has happened over the last few years, and if we look at it, there are a lot of similarities between what FCA and the Renault-Nissan-Mitsubishi Alliance are trying to achieve. That may be why, although nothing has been signed, the board members of Renault have already expressed interest after reviewing the proposal on Monday, May 27, 2019, at its headquarters in Boulogne-Billancourt outside Paris. Investors have already begun to show favor in this merger, with shares in Fiat Chrysler up 10% and Renault 14% in European trading. In addition, the French government owns 15% of Renault, and has also discussed interest in the idea of a merger with Fiat-Chrysler.
“[Such a merger would show] our capacity to respond to European and French sovereignty challenges in a globalized context… We need giants to be built in Europe." - government spokeswoman Sibeth Ndiaye said Monday, May 27, 2019.
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