Fiat Chrysler’s (FCAU, $12.65) $40 billion merger deal with Renault is on a shaky ground

Over assumed execution risks, Fiat Chrysler’s $40 billion merger deal with Renault is far from complete, and if the deal does see through, it would take a year or even 18 months to reach fruition.

The first major obstacle is choosing the right leader for the combined entity as both companies have complex business models. The focus for the automaking industry is also gradually shifting to autonomous driving and electric vehicles. This will add a significant burden on investments.

The Italian-American automaker has offered Renault a 50-50 merger of equals that would create an 11-member board split equally between Renault and Fiat Chrysler, with one seat going to Nissan. Fiat Chrysler’s shareholders would receive a special dividend of 2.5 billion euros (about $2.78 billion) to account for Fiat Chrysler’s higher market value. Existing shareholders of both automakers would get half of the combined company.

The deal is significantly complicated by the French automaker’s role in the Renault-Nissan-Mitsubishi Alliance. The alliance’s chief Carlos Ghosn was arrested in November over mishandling of funds. Even under his leadership, the two companies haven’t achieved all the benefits executives had hoped. For example, their engineering units still operate largely autonomously.

On the other hand, Nissan’s CEO has stressed internally that there is no interest in the Japanese automaker’s part for a full merger right now.

One of the questions the proposed merger raises is how the new management structure would pan out. The consensus sees Fiat Chrysler Chairman John Elkann filling the same role at the combined company.

Another question haunting the merger is how the operations and production might come together. In recent months, with sales continuing to weaken, many have begun to speculate that the Fiat marque could soon be pulled out of the U.S. market.

Overall, it’s only a matter of time and a wait-and-watch game on how the merger unfolds.