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(CNN Business) —  

Fiat Chrysler has withdrawn its proposal to merge with French automaker Renault — a deal that would have reshaped the global auto industry and helped the carmakers compete in the race for electric and self-driving vehicles.

The company said Wednesday that it “has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”

Earlier in the day, Renault indicated the French government requested its board of directors postpone the vote on the merger. France, which owns 15% of Renault, previously indicated that it would support a merger if the companies protect French jobs and auto plants.

France, which owns 15% of Renault and is the company’s largest shareholder, had previously indicated that it would support a merger if the companies protected French jobs and auto plants.

Renault said in a statement on Thursday that it was disappointed not to be able to pursue the merger, which it said had “great financial merit” and “compelling industrial logic.”

Shares in Renault plunged nearly 7% in Paris after the proposal was withdrawn. Fiat Chrysler stock opened lower in Milan, but later recovered its losses.

The deal would have created the third largest carmaker behind Volkswagen and Toyota. General Motors would have fallen to fourth place in the global ranking. The proposal is the latest example of established automakers seeking partnerships to share the costs of developing new technologies including electric vehicles and autonomous driving systems.

The proposal was the latest example of established automakers seeking partnerships to share the costs of developing new technologies including electric vehicles and autonomous driving systems.