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Strategic Partnership for Electric Vehicles

Honda and Nissan are reportedly exploring a potential merger to strengthen their position against EV rivals. Talks aim to enhance competitiveness, especially in the growing Chinese EV market. In March, Honda and Nissan agreed to pursue a strategic partnership focused on electric vehicles.

Both firms provided identical responses to the BBC, stating, “As announced in March, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other’s strengths.” The companies have not denied the merger discussions, first reported by Japan’s Nikkei newspaper, but clarified it is “not something announced by either company.”

The discussions are reportedly in early stages with no guarantee of a deal. If there are updates, Honda and Nissan promised to inform stakeholders “at the appropriate time.” According to Japan’s TBS TV channel, the companies may officially confirm the talks as early as next week.

Industry Challenges and Possible Implications

Competition in the global auto industry has intensified as production shifts from traditional engines to electric vehicles. Honda and Nissan’s potential merger could be seen as a survival move amid pressure from cheaper EV makers like BYD. In November, China accounted for nearly 70% of global EV sales, highlighting the need for automakers to strengthen their market presence.

Nissan’s alliance with Renault could complicate any deal, as restructuring would be necessary. Japanese authorities may scrutinize the merger due to potential job cuts. Foxconn, the iPhone manufacturer, reportedly approached Nissan about taking a controlling stake, but Nissan declined to comment on the Bloomberg report.

In August, Honda, Nissan, and Mitsubishi Motors announced plans to cooperate on EV batteries and other technologies. The Nikkei suggested Mitsubishi might join any future Honda-Nissan partnership, especially since Nissan is Mitsubishi’s largest shareholder.

The merger speculation influenced stock movements in Tokyo. Nissan’s shares rose over 23%, Mitsubishi’s increased nearly 20%, while Honda’s declined by around 3%. Industry analysts noted that survival for smaller carmakers is becoming harder amid rising competition from new Chinese EV manufacturers.

Jessica Caldwell, an analyst at Edmunds, said, “It’s necessary to survive, not just to survive, but to afford the future.” Jesper Koll of Monex Group questioned if the merger would create a stronger competitor or merely “rearrange the deck chairs on the Titanic,” suggesting neither company has products or technology that global consumers currently desire.

Honda and Nissan’s combined sales reached 7.4 million vehicles in 2023. Despite their size, they struggle to compete with emerging EV leaders like BYD, which surpassed Tesla’s quarterly revenue for the first time in October.