Nissan Motor Co. is pressing partner Renault SA to sell down a portion of its stake in the Japanese auto maker as part of a grand bargain to reorganize its more than two decade-old alliance with the French car company, according to people with knowledge of the talks.
The negotiations include whether Nissan will join a new unit Renault is creating to house its electric-vehicle assets in exchange for the French car maker winding down its stake in Nissan.
Top executives from Renault and Nissan have been shuttling back and forth between Japan and France to hammer out the details of the deal, which, if agreed, could be announced as early as November, some of the people said.
Nissan executives, including chief operating officer Ashwani Gupta, were in France late last month, when they discussed whether the Japanese car maker would invest in Renault's new EV business, some of the people said.
Renault is preparing to create two separate divisions within the company to manage a major shift away from fossil-fuel vehicles: one that would focus on EVs and software and another for its traditional combustion engine and hybrid assets, executives have said.
The French car maker plans to hold at least 51% of the new EV entity, with Nissan also owning a stake if it ultimately chooses to participate.
In return for joining Renault's EV efforts, Nissan is making a number of demands, according to the people close to the talks.
One is for Renault to sell down at least part of its 43% stake in the Japanese car maker, a longtime goal for Nissan, these people said.
Renault chief executive Luca de Meo was in Japan at the weekend to carry on those discussions and attend the Japanese Grand Prix 2022, according to people familiar with his travel schedule.
The Financial Times reported some details of the discussions Friday.
If Nissan decides to join with Renault, the two auto makers will effectively be taking their alliance -- a globe-spanning partnership that has been under pressure since the 2018 arrest of longtime leader Carlos Ghosn -- into the EV age.
For Nissan, even a partial sale of Renault's stake in the Japanese car maker would be a critical step in quelling some longstanding tension within the alliance.
The Japanese car maker has chafed at what it saw as an uneven relationship, where the smaller French partner held outsize influence in the partnership by virtue of owning a controlling 43% stake in Nissan.
Renault executives, meanwhile, have felt that they aren't getting enough of a return on their stake in Nissan, and that the funds would be better spent elsewhere if they could get some of their money back.
Renault isn't opposed to the idea of selling down its stake in Nissan but wants to make sure any agreement is binding and long-lasting, and that it gets a fair return on the sale of Nissan's shares, said some of the people close to the negotiations.
One option under discussion is for Renault to sell Nissan shares if and when they reach certain price points, these people said.
Nissan shares have more than halved in value since 2018.
Across the auto industry, executives are trying to decide on how to restructure operations that have long been built around the internal combustion engine for developing EVs, a technology that requires vastly different resources and hefty investment.
German auto-making giant Volkswagen AG last month took its luxury sports-car maker Porsche AG public, a move executives have said will help the company bankroll its transition to electric vehicles and self-driving cars.
Earlier this year, Ford Motor Co. also revamped operations internally to create separate divisions, including one that would be focused solely on electric vehicles and another on gas-engine models.
Others like rival General Motors Co. have opted to keep the two businesses combined, a configuration that executives say is necessary because the fossil-fuel side of the business still drives the bulk of the profits.
In creating the new EV division, Renault wants to ensure that it has the wherewithal to invest in future technologies by raising capital from outside investors.
Internally, the two new divisions at Renault are known by code names "Ampere" for the EV side and "Horse" for the gas-engine business. Executives have said they plan to take the new EV division public next year.
Mr. De Meo plans to update the market on his strategy at an event on Nov. 8, although there is no guarantee that Nissan would have made a decision about whether to join Renault's EV unit by that date.
For now, Nissan is debating whether to collaborate with Renault on the spinoff of its EV unit, according to the people close to the talks.
By participating in Renault's EV unit, Nissan would avoid putting further strain on its relationship with the Japanese auto maker's top shareholder and show the two are collaborating more deeply in EV development, these people said.
Renault's new EV company could also boost the relatively small amount of revenue Nissan brings in from Europe and help it maintain its footing as EV sales become more competitive in the region, some of the people said.
At the same time, some executives at Nissan believe the company should focus investment on its bigger markets including the U.S. and Japan, as well as China, where sales have slipped in recent years, these people said.
The auto makers are also trying to sort through jointly developed intellectual property and how that would be transferred to the new business, the people familiar with the talks said.
