A pair of Japan’s largest automakers, Honda and Nissan, are in talks to form a partnership to boost their competitiveness in the electric vehicle (EV) sector. The companies have reportedly signed a memorandum of understanding outlining plans to split equity into a new holding company from which both will do business.
A key objective of the potential merger is to help Honda and Nissan challenge EV market leaders such as Tesla and BYD. Mitsubishi has also been invited to join this collaboration after being asked to take part in Honda and Nissan’s earlier efforts to jointly develop EV technology.
Nissan, in particular, hinges heavily on the success of this deal. Analysts suggest the company faces significant financial struggles. They say Nissan may only remain viable for one more year unless another entity, such as Honda, acquires its shares. According to Reuters, Nissan’s mid-2024 net earnings fell over 90% year over year. That led to a 70% reduction in its annual operating profit forecast.
The talks are critical for Japan’s automotive industry, which has fallen behind China in the EV transition. Japanese automakers are now losing market share in key regions, including Southeast Asia, where Chinese manufacturers are increasingly dominant.
