Renault Braces for €2.2 Billion Loss Due to Nissan’s Overhaul

 French automaker Renault is projecting a €2.2 billion financial hit in 2025, driven by its 43% stake in Nissan, which announced a $4.5 billion loss and a sweeping restructuring plan on May 12, 2025. The anticipated loss, disclosed in a regulatory filing, underscores the deepening challenges within the Renault-Nissan alliance as both companies navigate a turbulent global automotive landscape.

The financial impact stems from Nissan’s decision to cut 20,000 jobs, reduce production capacity by 20%, and write down assets, including closing three plants in China and the U.S. Renault, which relies on Nissan for 30% of its global revenue through shared platforms and technology, faces a writedown of its Nissan holdings, valued at €5 billion in 2024. The alliance’s joint ventures, such as shared EV battery production in France, are also at risk, with Renault potentially absorbing higher costs to maintain projects like the electric Micra, set for a 2026 launch.

Renault’s performance has been mixed, with a 2024 net profit of €2.1 billion but flat European sales of 1.8 million vehicles, constrained by supply chain issues and competition from Chinese EV makers. The company’s Ampere EV division reported a €600 million loss, despite strong demand for the Megane E-Tech. Nissan’s restructuring, which includes scaling back EV investments, threatens Renault’s goal of achieving 40% EV sales by 2027, as joint R&D costs may shift disproportionately to the French firm. CEO Luca de Meo has signaled a review of the alliance’s structure, hinting at reducing Renault’s Nissan stake to as low as 15% by 2026.

The €2.2 billion hit will strain Renault’s balance sheet, with debt projected to rise to €4 billion by year-end. To mitigate the impact, Renault plans to accelerate cost-cutting, including a 10% reduction in administrative staff and divesting non-core assets, such as its Formula 1 team. The company is also seeking new partnerships, with talks underway with Volkswagen for a shared EV platform to replace the discontinued Twingo. However, investor confidence is shaky, with Renault’s shares dropping 15% in 2025, compared to a 5% decline in the broader European auto sector.

The Renault-Nissan alliance, formed in 1999, faces its most critical test, with analysts questioning its viability amid divergent strategies. Renault’s leadership remains optimistic, citing a pipeline of 10 new models by 2027, but the financial and strategic fallout from Nissan’s overhaul will shape the company’s trajectory in a fiercely competitive market.