Nissan Motor Co., Ltd. (7201) Earnings Call Transcript & Summary

Hello everybody, and thank you very much for joining this event from everywhere in the world. Today, obviously, is an important day for our 3 companies, Renault, Nissan and Mitsubishi. And it is a real pleasure to share with you what we have built together. Our common future, of course, and still a unique alliance. We have all been waiting a long time for this moment. I remember mentioning to you 1 year ago that one should not be too impatient about the structural evolution of the Alliance. But now the time has come. After an intense and comprehensive common work, we are now ready to move our partnership obviously, to a new era. After 24 years of existence, our corporation holds its place among the world's automotive leaders. We must never forget. It covers 100% of the major automotive markets. The Alliance purchasing organization weighs EUR 85 billion in purchases every year. We have already gone a long way in terms of platform commonization. We have made a lot of decision together engaging in hundreds of common projects around the world. As you know, 60% of the 3 companies' models are already on common base and components. The figure will rise by the way, up to 80% by 2026 and up to 90% when it comes to electric vehicle. Today, we are giving new stronger perspectives to the alliance between Renault, Nissan and Mitsubishi. The architecture of this new deal should be understood as a coherent construction relying on 3 pillars. First, we looked at all business opportunities along 3 dimensions: regions, products and technologies. And we came up with a series of high-value creation operational projects in Latin America, in India and in Europe. We will go through these projects in detail. They are highly value creative. The second pillar of the new alliance is based on a simple and sound principle: The flexibility of each company to initiate new major projects, such as those announced by Renault during their Capital Market Day; and the possibility for the others to collaborate on these new opportunities, not because they are forced to do so, but just because it's good for them. Nissan and potentially Mitsubishi investments intention in a pair showcase, obviously, this approach. Another example is the all solid-state battery and autonomous driving, where Renault Group and Mitsubishi Motors might benefit from Nissan's developments. Another one is the software-defined vehicle, where Nissan and Mitsubishi may benefit from Renault's advanced research. Finally, the third pillar of the alliance comes as a consequence. It is a balanced governance between companies having cross-shareholding participation. As simple as that. The binding framework agreement signed by Renault and Nissan this morning defines the principles of a new governance scheme and the rebalancing of the cross-shareholdings between the 2 companies. A new agreement will replace the RAMA, and will be in place for an initial period of 15 years. Renault will transfer 28.4% of Nissan's shares into a trust and will keep 15% direct shareholding in Nissan. This transfer by the way triggers no impairment in the Renault financial statements. Renault will have full flexibility to sell the Nissan shares held by this trust along, of course, a coordinated process with Nissan, with no obligation to sell the shares within a specific predetermined period of time. Renault and Nissan will retain a direct 15% cross-shareholding with lockup and standstill obligations. They will both be able to freely exercise their voting rights attached to their 15% direct shareholding. All this will be subject to a cap of their voting rights to 15%. The voting rights attached to the Nissan shares held in the trust shares will be "neutralized" for most decisions. But the economic rights attached to these shares, dividends and share sales proceeds will still entirely benefit Renault until such shares are sold. We also continue to ensure cross representation in the Board of Directors of the 2 companies with the same representation level as today. Two Board members representing each company will sit at each respective vote. The Alliance Operating Board is confirmed in its coordination role, and I feel very honored to chair this important governance body. And now if you may, I will ask Uchida-san, Kato-san and Luca de Meo to tell you more about how they see the new alliance. I propose, by the way, that we start with you, Uchida-san. Thank you very much for your attention.

Thank you, Mr. Senard. Hello, everyone. It is my pleasure to be with you today as we take significant steps towards the next level of the Alliance. The world is changing fast, and it is critical for us to look at the way we do the business. Nissan has started its transformation journey with Nissan NEXT Plan in 2020 during extraordinary times of the pandemic and massive chip shortage. While being resilient, we took a visionary step with Nissan Ambition 2030. This set an [ honor start ] for our business. Similarly, Renault defined Renaulution and Mitsubishi, their midterm plan. However, we have been facing more challenging and disruptive environment. We need to adapt to the new reality and urgently address the issue like climate change, geopolitical scenarios, raw material hikes or fragmentation of market. When [ which ] we have a context, it is true that we can no longer stay still or work as an extension of the past. We need a next level of transformation. This is not a choice but a need. Recognizing this, Renault has already stepped up with their next phase of their strategy, and Nissan is working on its next midterm plan and strategic initiatives to support our vision of empowering mobility. The Alliance is a key pillar for us. We believe that the next level of transformation has to happen at the Alliance to adapt to the next era. It is with this spirit that we have been holding intensive discussions over the past month. We are building on collaboration across the Alliance to enable even deeper efficiency and share the expertise in areas such as electrification, SDVs and automonous driving. The high-value initiatives that we are considering will enable each company to fast-track innovation, improve cost efficiency and add value. Luca will talk about this later. But for Nissan, they strongly support our regional strategies in fast-growing markets such as LatAm and in India. We will unleash our lineup with new models. We will continue to enhance efficiency in our plants. In Europe, we continue to work on significant collaborations. These projects are a continuation our existing corporation supporting our geographical strategies where Nissan is taking the lead in Japan, U.S. and China, while working with Renault and Mitsubishi Motors in Europe and Asia. Another very important area is electrification, which is the core of our long-term strategy. Nissan continues to support customers to adopt electrified mobility. However, the speed of electrification and customer acceptance differs from market to market. Also, the regulatory and policy environment is constantly evolving. To catch this momentum, we are exploring many opportunities and options, including enhanced collaboration with our Alliance partners. I'm happy to share with you that Nissan intends to invest up to 15% in Ampere. We regard Ampere as enabler for Nissan to participate in new business opportunities in Europe, providing new collaboration and generating value. It is also -- or important that we maximize our alliance transformation with an efficient structure and enhanced governance. As I mentioned earlier, the next level of the Alliance requires a new approach. This will enable the Alliance members to prepare for future opportunities on an eco basis. Eco partnership is an enabler of transformation. I'm very confident that this new structure will deepen mutual trust. This will ensure that each member contribute with their strengths and work with shared ambitions for the future of mobility. However, the next level of transformation is not limited to business. To make transformation a reality, we must build a strong culture to support it, a culture of trust, transparency and respect. We cannot realize the true potential of our transformation without the right mindset. This mindset is important, not only for Nissan but also for partnership to be successful. It is this principle that helped Luca and me to drive the discussions to meaningful conclusions. I'm glad that both of us believed in the importance of this transformation and had strong support of Mr. Senard. Let me assure you, Nissan will continue to make significant progress to deliver sustainable growth and realize our long-term ambitions. I want to thank all our employees, partners and customers for your strong belief in Nissan. Thank you for your attention.

Good morning, everyone. First of all, I'd like to say congratulations to both Renault and Nissan teams on the new agreement that was presented today. I feel very positive about the new direction. This really fits the rapidly changing environment in the current automotive business, and I'm sure that it will strengthen all the Alliance partners, including Mitsubishi Motors. We at Mitsubishi Motors all have many achievements that illustrate the benefits of the Alliance, such as our new Outlander based on the joint CMF-CD which is already a great success. The new kei car eK X EV, which was awarded the Car of the Year Japan together with Nissan Sakura. I'm confident that under the new framework, the Alliance will bring us further valuable benefits. Mitsubishi Motors has to concentrate a large part of our resources on the market where we have a strong presence such as the ASEAN and Oceania countries. Thanks to the Alliance, we can leverage the expertise of our partners to meet the customers' expectations wherever in the world we do business. In that sense, Europe and North America are potential markets where we can utilize Alliance's assets. We have several projects going on with Nissan and Renault about expanding our product lineup in many regions and market segments. Being an Alliance member enable us to enhance our business, especially for electric vehicle. For example, North America is a promising field of collaboration. We will naturally rely on Nissan to enrich our car lineup. Europe is another area for business enhancement, thanks to the Alliance. As you know, we have already announced some OEM product from Renault, the ASX and Colt. There development are currently ongoing with a high level of efficiency. And our dealers are really delighted with those products. As the next step due to the strict emission regulations in Europe, we have not just but study introduction of BEVs. I'm sure that OEM in from Ampere can be one of the very attractive solution for us. I think that Ampere should be a part of our EV strategy in Europe. Considering these points, we will further study our share participation in Ampere. We see the Alliance as a great opportunity for each member company to grow further by using our best scale and each company's market advantage. As Senard-san, Luca and Uchida-san explained, Alliance will proceed to that next step. I believe that the new framework will bring us further success for the 3 companies. Thank you very much.

Good morning, everybody. So I actually came into the house in mid-2020. So actually, it helped me not to have a very clear and simple perspective on the Alliance. My priority with the Renault team at the beginning was to fix Renault and therefore intend to develop our own strategy. I always look at the Alliance as -- from the business side, and I try to push with the team to create an architecture of the Alliance that would maximize the value for Renault first, but for -- also for each partners and for all the stakeholders. I consider that what we have agreed is actually a much better setup than what we have had in the last past few years. I'd like to illustrate this like a 3-stage rocket. On top, you have now a new governance scheme that is much more straightforward. We can now operate like a normal company, like any other company that has a cross-shareholding participation. So before we had 43 -- like Jean-Dominique says, 43.4% without any voting right. Now, we have 15% with full voting rights and the same is for Nissan. And the remaining 28%, as Jean-Dominique explained, is neutralized as of today. But we will keep economic rights, including dividends as long as we want to sell them. We have agreed on orderly sell-down of these shares, where Renault can decide when and how to reduce that. It means we have actually also more agility and choice to continue improving the quality of Renault's capital allocation. So the middle stage of the deal, seen from Renault, is about regaining some strategic agility without breaking necessarily the ties and the synergies that were existing and where they exist. Renault has now a clear strategy, as we have explained on 8 of November, to specialize on the topics that will create the value in the automotive industry of the future. So we decided sometimes to do it with partners, sometimes not coming -- even coming from the automotive industry. So you have to see our, let's say, and the deal and our strategy, it's actually a different a complementary concept to the Alliance that, as you know, has been creating on the logic of finding sites and synergies at the beginning. Because the world has changed as Uchida-san said in 24 years. So -- but by executing this deal, we actually can do both, okay? We can preserve the scale, all of us. But at the same time, working what will make us unique as Renault, as Nissan or as Mitsubishi. So I want to talk about Ampere for a moment. So after the announcement of Qualcomm investment, so the investment with Nissan and potentially Mitsubishi, this was a nice surprise. Today, that confirms the traction of that project confirms the attractiveness of this EV and software front runner that we are building in Europe. But you can also look at Ampere the product will allow Nissan and Mitsubishi to be in a stronger position for example, in Europe than any other non-European company wanting to stay or enter into this EV and software, let's say, race in Europe. And then I'm talking about Horse. Nissan and Mitsubishi will not enter into Horse. They are among the, I think, 8 customers that we will have right from the beginning. But I can assure you that they will benefit from the productivity gains and the synergies generated by this new venture. So they will get engines potentially at a very, very good and improving cost and price. But the most important thing for me, which has been totally underweighted in the discussion in the media where everything was focused on rebalancing our IP, is that the base of this deal is that we are reactivating business operation like at the beginning of this alliance. So we have identified, we have quoted, we have planned and are ready to start initiatives that will benefit all companies involved and that might create hundreds of millions in value every year, maybe billions if everything works perfectly. So this is a very, very important part of the story that was not told so far. Let me go quickly in some other things. I'm going to start with Latin America, okay? In Latin America, we will have new exciting projects in Argentina as well as a new Renault vehicle to be produced in Mexico. It will be actually the first time in 20 years, and it opens the opportunity for us to enter the Mexican market with local production. So this whole thing for Nissan, for Renault is about balancing, de-risking, but also boosting operation in Latin America that we know will be one of the region of the world that will grow in the next years. Then we have India. India is a joint lineup for India and for exports with bigger and more technological cars based on Renault platform. It is the -- actually the only possibility for us and Nissan to stay profitably in one of the most important markets in the world. So that's another big one. Then we go to Europe. In Europe, the future Nissan small car -- a City car will be produced in electricity in France from 2026. This car has 80% commodization with Renault 5. And because of this deal, we enable a 40% reduction in the entry ticket for Nissan. So a very, very competitive proposal. Again, we said we didn't force anybody to do things. It was the choice of Nissan. Kato-san mentioned ASX cars to be produced in Spain and in Turkey. And maybe there are other things we can offer you in the future. All these plants will boost our capacity utilization in Europe. And very important is also the LCV. On the LCV, Nissan will buy Renault Group FlexEVan range. So this is the first software-defined vehicle that will enter in 2026, the Renault range. But there is also a project which we never talked about beyond the vehicle, okay? One example is we will double the Renault Nissan outlet shared with the same investors by 2025. This will substantially increase those investors' profitability and reducing the distribution cost. We will deploy together an EV charging infrastructure in Europe together that will bring us at the level of the leader of the market. We were going to engage in circular economy. Renault is actually in Europe a few years ahead of the game. It has big ambitions. So it makes a lot of sense that Nissan jumps on the wagon like, for example, putting together end-of-life batteries or the production scraps in Europe to achieve quickly critical mass. So you see that, that deal is just not about changing the shareholder structure. It's a substantial deal based on operational common sense and business intention. So I would like to conclude by thanking all the teams. I want to send out to Nissan and Mitsubishi teams mentioned that Renault is motivated to engage in this new chapter with the right mindset. So we will be consistent. We will be result-focused. We will be generous and fair, as I believe we have been, now Uchida-san from our side so far in the negotiation. And to really conclude, let me take 30 seconds to honor Uchida-san. We have been knowing each other better in the last month. And we -- I think we built mutual respect and trust. I think that is very important moving forward also for our organization. I can guarantee you that we wouldn't have the deal without him fighting for it. But make no mistake, he has been defending Nissan interest from the beginning to the end. But I found really an engaged knowledgeable, fair and trustworthy partner in him. So thank you, Uchida-san. And thank you, Jean-Dominique, for supporting us. And thank you, Kato-san, because we make, I think, a good team together. Thank you.

Well, there we are. Thank you so much, the 3 of you. Obviously, as you can see, there are a tremendous amount of information behind the agreement that has been signed this morning. And I guess we will be very happy to go through the Q&A question that I will try to monitor a few except that. Before we start, I would honestly simply say thank you. Thank you to the three of you. Thank you, Luca. Thank you, Uchida, thank you, Kato-san. Honestly, I mean, you have been incredible in the developing the trust that was necessary in such an incredible important deal. And honestly, with all my heart, I have to say, thank you, because we have been doing a tremendous work. And if I may, and I'm sure you would be okay with me, I would like to give a special thanks to the teams. Teams are sitting here in front of me in front of us. They have been doing day and night an incredible work. And I have been witnessed in my life of many international deals. I can tell you this one was interesting because, I mean, 3 companies, 2 main, of course. We're working hard, hard and hard. And we had -- with the results that we can now discuss together. It is a real new step for the Alliance. I think it's history. And I'm more than happy to comment that with you and the help of our team here. I would like to open the Q&A question-and-answer session. So it's up to you.

Henning Cosman from Barclays. Perhaps the first question for Mr. Uchida. If we're trying to understand you're up to 15% investment in Ampere. Please, could you share how you think about the level of investment? What will determine if you go all the way up to 15%, or if the participation level is going to be lower? And then Mr. Senard, I think you said you would go into a lot of detail about the value-adding projects. Perhaps you could give us a few numbers as to what volume of business by when you're seeing in the regions. Luca, you mentioned India, I think that's perhaps a big one together with LatAm if we could get just some more detail.

So perhaps, Uchida-san.

Sure, sure. First of all, thank you for your question. And I really would like to highlight again, if you look at the circumstances of the business we are facing, we cannot do the business in extension from the past for the future. And knowing that the Alliance strengths and assets geographically -- so from that perspective, we need to grow and how we can further to make the Alliance to the next step. Then Luca has announced about his extension of the Renaulution where the Renault would like to further make the value up through this Ampere. As we in a partner, strategic partner, we are, we further would like to seek our business opportunity, how we can work together. And therefore, we say up to 15% because this is further to see down in the road. We're just talking about the beginning now. And we did like to have our participation to work together. So that's the how -- the number was been set as up to 15%. For instance, that having one of the major strategic discussion on the new company, how we can further make our business opportunity to moving forward.

Okay. So that's a full of points. When it comes to the projects, I said that they were highly value creative and I strongly believe it. By the way, before I give the word to Luca, and perhaps after to Gupta-san. I think you have to understand that these projects are ready. I would say that they are not just in front of us like a dream. They have been largely discussed within the teams and prepared that the Alliance Operating Board level. So they are ready. Maybe, Luca, you would like to be more extensive and maybe then, Gupta-san would have to complement for the Nissan part.

Look, I don't -- let's say, we used in the past to generally speak about billions of synergies, et cetera, et cetera. Then it was very difficult to trace. So we're not going to fall in the trap of giving you a number today. But what I can tell you is that it's -- first of all, it's a combination of maybe cost avoidance, not investing to us in the same thing, maybe additional opportunity getting volumes, margins because we do better cars. So it's a combination of all. And it's really sizable, okay? So it's maybe hundreds of millions a year -- but what is important, they are very fairly shared between the 2 companies. Maybe sometimes 50-50, sometimes it's 60-40, sometimes is 40-60. But that's the way, let's say, we build all the projects. And we actually picked to make sure that the thing would be pretty locked, projects that we can only do together okay? There is no way you can do it separately. So at least we are [ condemned ] to work, okay? So sometimes it's staying into a market, sometimes the technology, sometimes a new operation in the plant. So it's a combination of all. And you will be able to see and to track the progress of the things based on the success of the project. As Jean-Dominique said, they are actually pretty well defined. We know how to do it. It's not a rocket science. So it's something that we know how to do. And now that the -- let's say, the challenge for us, for the teams, et cetera, would be to execute them, okay? So we need to go back to work and get out of discussion with legal people, et cetera, and come into the operation and execute one after the other. But I think we have all the ingredients. And with the right mindset also, the teams locally, they can -- we already proved that we can deliver. So that's what I can say on the thing. So -- and it's not only India and Argentina, it's many more things.

Okay. But maybe Ashwani would like to take your word on this project, if -- fine.

Thank you. Thank you, Luca. I think as Luca said, I would summarize it that in the high-valued projects, synergy is not for synergy; synergy is for performance of each company. So to start with, I think we will be coming up with the numbers in a few days, few months for different kind of projects, which we are going to do together. But just to give you the magnitude, which we are talking about. For example, in Latin America, which is roughly now 5 million global auto market. For example, Nissan is only there with 1 SUV and 1 Pickup. But we are going to cover from a segment till the full -- [ towords ] the one-ton pickup, thanks to the exchange of products between the 2 companies and not only products but also the manufacturing plants. For example, in Mexico, where Nissan is #1 for last 11 years, Renault will get the opportunity to use Mexico manufacturing plant of Nissan as well as the product, and this is how we are going to exchange the business between the 2 companies. In case of India, which became the third largest market with roughly 4.7 million and going to 6 million very soon with a 27% growth. Definitely, after spending 12 years together with Renault and Nissan in manufacturing facility in R&D center, in digital center, finally we are going to come up with a very, very pragmatic lineup focusing on SUVs, but also talking about the electric vehicle. And there also, we are going to maximize our assets. So these are few projects which Luca said. I think there are multiple projects in the pipeline. And as and when we are ready, we will be sharing with you. Thank you.

Thank you, Ashwani. I hoped it helps.

And probably if I can say, I can add -- I repeat what I said before. Since a long time, we haven't worked together on such a sizable project. So that's everybody has to understand this. This is a very important part of the story.

Right, for sure. Okay, maybe then number 2 here. Then don't worry, we'll come to you afterwards.

It's José from JPMorgan. Maybe a question for Luca. Can you maybe explain a little bit more the framework that you have, that you're contemplating to sell the stake in Nissan, what are the key variables you're thinking about, and how do you want to proceed? Do we have a time frame for that? And then for CEO of Nissan, I'd love to understand a little bit better how are you evaluating the investment in Ampere? Which key variables would you like to see from the investment project to take the step to invest?

So the way we dealt on the, let's say, and the spirit behind the idea of creating the trust and then agreeing on the procedure or the proceeds how to do it was obviously not to impact Nissan negatively. So I think we will do it in orderly -- in a good phase. We will do it in an orderly manner. So we have, let's say, negotiated with the [ Stefan ] on how to do it because it's no aggressive intention into the thing. But it will allow us to monetize a big amount of money that we can use on other projects because you don't need to trap so much money to make the Alliance work because that's basically the story. So it's going to be gradual. We have some thresholds. And we also have agreed on the concept of Renault [indiscernible] its shareholders because we are not here to intrude the governance of Nissan, we have to do it like a good partner. So -- but the good news is, of course, that we did it in -- on the -- with the proper spirit. But the good news for us is that we can kind of monetize this. And I think it's important for us because we have so many, let's say, ideas and projects that we want to run that, that money could comfort. I don't think it's going to be an issue of weeks or months. It's going to take some time, but it's okay like this. I mean, the direction is set, and that's what we're going to do, try to do professionally and in a collaborative spirit.

Yes. Thank you. Thank you, Luca. Maybe I can like to add a little bit more because as I said in my speech, the purpose is not rebalancing. The purpose is how we can make ourselves much stronger in the next stage. And in order to enable that, the governance or that opportunity as a Nissan to do our all sort of value up is important. As what Luca is doing for the Ampere. If you look at the many enterprise today, they are doing the order transformation. Why? Because it is very urgent for the automotive industry to transform and how we can make the company to the value to be much higher. And really, really would like to support what Luca is doing. If we talk about the Renaulution, he is moving to step by step how to make the Renault value to be increased to meet with the market needs. That's the main point. And in our side, can you imagine like Nissan, in 5 to 10 years ago, we used to have a global standard model of the business that could be probably appreciated in the U.S. market, China market and Europe market. But if you look at it today, let's take for an example the electrification. As I said, market-by-market different speed, different regulation, then we have to make our value through that our history or future under such circumstances. So therefore, we felt it would be a very good business opportunity for us to do Ampere with a strategic way. So that's the reason how. Of course, how do we go on the next stage? We will have -- when that time comes, we would like to further to [ explain ]. But that is how we started to discuss, because me and Luca started to discuss from what the last the May, to talk about next ally of the Alliance and how do you want to set ourselves to transform.

It [ took ] like more time. It was very intense.

Yes. Yes, yes. I agree with you because I'm probably talking with you much more longer time than I am with my family, by the way. But that is how we are doing, and that's very important. So I was a bit more emotional to say, because the Alliance always have this respect, and we have to put everything transparent. We know what is the history, what we had on 23 years. Then how did you want to work for together to make the company to make our value to be much stronger. That is the one of the most important things I did like to address to everybody here.

I like your word, Uchida-san, when you say that rebalancing was not the purpose of the deal. I mean that's very important for everybody to understand that it's a catalyst, honestly, because the business is the focus really. And if I may just add something, I mean, at last, we're going to get rid about misinterpretations, which obviously has -- I mean, made everybody busy for so many months without any real purpose. So now all that is behind, and we are just living now a very normal, simple, legal situation between partners that want to work together for the next 15 years and more. And it's so much simple that way, that I think it will tremendously help the business, which is basically what we want to do. So thank you for the question. Thank you, Uchida-san. Maybe on number 4, I understand that's the next one, and then I will be back.

Peter Campbell of Financial Times. Two questions, if I may. Luca, you're going back into Mexico. Does that mean one day, you might like to go further north into the United States market? And more general question on projects. This is not the first time we've heard about the Alliance working together. Often the problem has never been that one company invested in another or they were shareholdings. But the fact that it's very difficult to get teams from 2 different companies to work together on the ground. I wonder what today's announcement does to help that issue?

Well, gentleman. You really can speak out.

Yes. I mean I think that let's say, it's actually not in the plan to imagine, let's say, Mexico as a platform for us to go to U.S. That's what Nissan does, okay? So we are more looking at the way to use Mexico to kind of balance Latin America so that you can play on 3 or 4 countries like Argentina, Brazil, Colombia. Then you have something -- it's a very volatile market, very risky somehow. So the more you are you can put different axe in different baskets, because the better it is. That's the spirit of the thing. It's actually very competitive, and Nissan is very good there. So we just have to find the right product and the right platform to do it. So it's not like completely. So we'll have to discuss. I'm not going to do things if -- just because I have to do them or it's announcing to the thing I'm going to do that because I make money on the thing. It's a very simple concept, okay? So it's still a work of the next, let's say, months and weeks, but we have it pretty clear. Let's say, on the way -- on the potential, let's say, on the way in the system will work. I think that we need to -- and this is also another discussion we have to do with Ashwani, with Uchida-san and the team, is we have to reengineer the connection between the 2 organizations, right? So because the old spirit of the thing at that time was over the last years, maybe last year's now, but at a certain time, was to actually converge the 2 organization to have one company. But actually, we realize that it doesn't make sense, right? So it's much better if each company does the best for optimal thing from themselves to get organized because if we do good job there will be opportunity to cooperate, okay? That's the thing. So we have to reengineer. I think there is a possibility to do this around the 5 or 6 things or the projects. So of course, we have to reinforce and maybe restructure on the purchasing side. It's nice to say, let's say, maybe we can optimize but it's a platform that is very strong and works. We probably have to work on the innovation and techno roadmap discussion for the future IPs, et cetera, et cetera, and how to do it. And then we have the opportunity on the projects, okay, to actually give really responsibility to each other, to actually execute the thing, right? So we have to design a project-driven organization rather than mixing up like its [indiscernible] joining everything together. That's not what we want to do. So I don't know, Ashwani, if you want to make a comment on that one, but -- because as a COO -- yes, I think it would be a...

Thank you, Luca. I think, Peter, your question is what will change? I think one thing which we are changing for sure is to not have a business relationship based on buyer and seller agreement. We are changing the business relationship into profit-sharing schemes. Because the moment each member of the team is convinced that there is a performance in it, then we don't have to worry. So as top leadership team, what we are doing is to build a system, a process, a governance, which will convince each and every team member that this project will bring the performance to their company. Which means, once again, synergy is not the objective. Synergy is the consequence. One of the example, I think, in the last Alliance 2030, we talked about the compact EV. Nissan almost decided to exit this segment. And when Luca proposed the Renault car, and he himself, I remember the sketch he made for me, that Ashwani, if you are able to do this compact car in Europe, fully electric based on our, this product, this will be an iconic model for Nissan. And this proposal came in and we were able to convince our designers and our teams that this is the product which Nissan is looking for, which can be an iconic product in Europe. On the other side, when it comes to whether this business will make sense or not, not to start with the conventional way of discussion or, I would say, negotiation, going into what value it brings to Renault to share the platform, to share the plant and what value it brings to Nissan not to invest in the compact EV and use that. I think that's something which we are changing and which we are going to change for all these high-value projects.

Yes. Thanks, Ashwani. If I may, because if you look at the Alliance in the past that we had some very strong challenge in terms of the volume, right? But look what happened to the Nissan in the past 2, 3 years ago, right? We -- under the Nissan NEXT, we shifted ourselves quality of sales. We want to have a value to be provided to the customer. We want the customer to have the good acceptance of our vehicle. So what's important now is how we can make sure to create the value, which also enabled to reach to the business in terms of the profit. And also, we do have our responsibility for the society as well. So world has been changed. We need to wake up. And we need to transform ourselves to a different view of the business, and that is what we are going to do in the Alliance. So we would like to further to show you some proof point later or when it comes to time, because we need to have this kind of mindset to be changed. We have to get out of the some typical way of the working, because world is changing. And that's the most important. That's the reason why we're having this whole discussion together, the partnership, to look back what was the way and how we want to go forward together.

I think before we get to the question two, Kato-san, maybe on this point, the partnership between -- you had a word in your tech, maybe you like to...

Yes, okay. Thank you Senard-san. Of course, as Mitsubishi, we don't have a so long history of Alliance member compared to the Renault or Nissan. And -- but so far, we have been involved in several projects. But -- during the -- for example, like our AOB, I know that so far, there are a lot of discount and a bit complicated discussion was ongoing. And I also felt that it looks a bit difficult. But -- under this new agreement, I think that we are going to the next step. And for me, it looks that the Alliance will be more flexible under this new framework, and also to be open and much more free to everybody, including Mitsubishi Motors. So this is a very welcome for our Mitsubishi Motors too. And I'd like to have a more close relationship with 2 companies to have more [ collaboration ].

So perhaps number 2 are there in the room, waiting for some time.

The first question is for Mr. Uchida and Mr. de Meo. As there have been many discussions on IPs during the negotiation, what's the conclusion or agreement 2 companies have reached so far. And is there anything like Renault has to ask for Nissan's permission to use Nissan's IP? And then, sorry and the second question is for Mr. de Meo. How do you estimate the market value of Ampere? And is Renault going to keep the majority of share of Ampere after the future IPO? And I'd like to know what you think about the market environment of today.

You want to start with that, or I should.

Yes. I think I can start with the market environment. As usual, complicated. But I think in the case of Renault, we feel like because of the, let's say, the work we did in -- starting 2020, we entered the year with a very solid, let's say, order bank, and we're getting new cars coming, the Renault Megane, that are really, let's say, pumping up the business. And we enter end of '23, 2024 with the new wave of products. I mean, remember that Renault and all [ his ] brands will launch 25 cars from now to 2025. So I think we will be pushed, and we have the potential to be anti-cyclical. And we have we've put the house in the right order in terms of cost, et cetera, will continue. But I think I'm relatively optimistic, but we are not naive. We know that the environment is complicated. You have a recession. We have inflationary pressure, et cetera, et cetera. But what I can tell you that in the last 2 years, the half of Renault team has been used to fight very tough battles. So we're not scared about challenges into the business. So that's to answer the market value of Ampere, that's not me that decides that. It's the market that decides that. And the only thing we can do is actually put enough substance into the project so that the market will recognize and the investors will recognize the value of it. I feel that when you are creating something that might sell 1 million electric cars in Europe, that might achieve EUR 25 billion turnover, double-digit profitability with a very efficient manufacturing, all the technology in 2 platform, 6 model plus or some of the models that will come, for example, from the partner plus Alpine, software-defined vehicle, centralized electronic architecture of the new generation, a very strong distribution already in place, retail financing already in place. I mean, there are not many examples on the planet of EV software, let's say, focused organization like this one. So the investors will decide. I cannot fix the price. I can aim, we have some estimation and -- but I don't think it's -- it will be fair for me to share that kind of information. Then I'll leave it to the IP, which always bit became one of our favorite topics.

Yes, I always get surprised every time I see all of the IP on the newspaper. But when you talk about -- let's talk about we had 23 years of the working together. We have a lot of co-owned asset in the company. And our partner is making the transformation. And we are, of course, discussing in a common sense way how we're going to have the IP to be treated to a right manner. So it's not only the Nissan, but also the Renault and it's going to be the same discussion. So it was a good moment that we have been able to discuss that because, again and again, I go back with the past 23 years. Now we want to transform the way we're going to work, collaborate each other for the next year to be competitive. That's the key for us. Then in order to do that, we need to look back all the things, not only the IP, how are we going to further to work on a project basis as the question was raised. How are we going to collaborate on the new area like Ampere we are talking about, and how does the governance enabling those things. So it was a very huge change from the past and the future. Why we are doing that? Because we want to grow. And under this difficult circumstance, we cannot do it. Again, I'm telling 100x same word, we cannot do the extension from the past way for the future. We all know that. Therefore, we are transforming. And that has taken a lot of a good discussion. I'm very happy that now we came to this moment. And now we have to prove to the world how we can further to make our value to be enhance.

We became IP PhDs. I think that -- let me say 2 things. One is a clear message is with the discussion on the IPs, except on the deal that we made, I think we can execute all the projects that we have in the plan. So that should be reassuring for everybody. So the Ampere, the Horse, the [ Alpine ], all the things that we have into the tank. So that's -- and we have the techno bricks and the access to what we need to do, to execute the project and to show to the market that this thing -- all the projects have substance and value, okay? But one thing that we learned in a way, and this is important to understand, is that the [ all ] IP setup, and the [ all ] IP discussion, all the way the things were shared, et cetera, was actually not completely structured at the level of granularity that is necessary in a partnership between 2 global companies at the level that is required, okay? So by discussing this, we actually revised the way IP will be regulated. We probably solved a large majority of the legacy IP discussion, and we have now clear rules on how to handle future IP creation, okay? So that means that we have to go into the operational -- into the OS of the house, and reprogram, record some of the things. But now we have a base that we know it's much more clear, transparent for the future. That's the benefit also this is very, very painful discussion on the thing. We have a system now that works.

Yes. The good news is, I guess, that we can talk less about IP now than we have because, honestly, legacy is now behind us. This is good. Okay. I think there's a question here from an analyst.

It's Daniel from Bernstein. Luca maybe for you. Compared to the strategy you presented last year, are we kind of adding something to the strategy? Do we meet your expectations concerning the Alliance? Or is there more room for improvement? And then we -- for Kato-san, as the, let's say, a little bit less involved party here in the governance realignment, what would be your message to the owners of Nissan and to the owners of Renault, why they're not getting a bad deal? Well, this is a good news. So what's the upside kind of for the -- for some of the shareholders or stakeholders that may feel the other part is getting the better of the other? So kind of your message as a third party in the room.

You want to start first? Or you want to think about it.