Honda, Nissan Explore Collaboration as EV Competition Rises, But Deny Merger Plans

Nissan, Honda, and Mitsubishi explore collaboration to counter Chinese EVs, but no merger decision yet.

By Thea Felicity

Dec 18 2024, 10:08 AM EST

JAPAN-ECONOMY-AUTO-BUSINESS-HONDA-NISSAN — Makoto Uchida (L), president and CEO of Japanese auto maker Nissan, shakes hands with Toshihiro Mibe (R), director, president and representative executive officer of auto maker Honda, following a press conference in Tokyo on August 1, 2024. RICHARD A. BROOKS/AFP via Getty Images

Earlier this year, there were rumors that Nissan and Honda were considering merging in hopes of outselling rising Chinese EVs. Now, both Japanese automakers acknowledged discussing possible collaboration but neither has announced any intention to merge.

News of a possible merger pushed the share price in Tokyo to surge 24%, while Honda's shares fell by 3%. Both issued a joint statement clarifying that they are exploring the possibilities of working together in different ways, but no decision has been made so far.

Japanese Automakers Collab Against Chinese EVs

These discussions also involve the alliance partner, Mitsubishi Motors. If the merger is to take place, the company will stand at approximately $55 billion, putting it in third position among the world's automakers, behind Toyota and Volkswagen, AP News reported.

The partnership is being driven by electric vehicles and growing competition from Chinese manufacturers like BYD and Nio, which have forced Japanese auto manufacturers to innovate and reduce costs. Nissan, Honda, and Mitsubishi have already announced plans to share EV components and collaborate on autonomous driving technologies. This partnership will help them regain lost ground against the competition and adjust to the new reality of electrification.

For Nissan, this deal comes at a financially stretching time, as it just announced plans to pull out 9,000 jobs and slash global production capacity by 20%. Plus, a quarterly loss of $61 million (9.3 billion yen) has pushed the automaker for greater efficiency and alignment with new market realities.

Honda, which also faced its own challenges, posted a 20% drop in profits for the first half of its fiscal year, primarily because of weaker sales in China, one of its major markets.

Despite all this, both Nissan and Honda see collaboration as a means to strengthen their positions in the global market, per Honda Global.

Though there is no definite decision on a merger yet, it will achieve the scale needed to compete with industry giants like Toyota, which produced over 11 million vehicles in 2023. However, even with a merger, Toyota would still be the dominant Japanese automaker.