Honda and Nissan no longer hide their flirting

Honda and Nissan are discussing a possible merger to survive in this new 100% electric world.

Nissan and Honda have entered an almost official negotiation phase regarding a potential merger to better compete with electric vehicle manufacturers, particularly Chinese ones. These talks come as the automotive industry is experiencing its greatest revolution with the shift to all-electric vehicles. An industry now dominated by a rapidly growing Chinese manufacturing sector.

In the Chinese market, which accounted for nearly 70% of global electric vehicle sales in November, Honda and Nissan are struggling to keep up. The two manufacturers sold a combined total of just over 8 million electrified cars in the past 12 months, which is significant but still below the figures of the giant BYD, which surpassed Tesla in quarterly revenue.

In March, the two Japanese automakers announced their intention to collaborate on new electric vehicle models. An agreement between close friends, very common in Japan where one can find Toyotas and Subarus or Toyotas and Mazdas that are strictly identical. In August, they strengthened their partnership, especially on battery technology, including Mitsubishi in their ambitious project. Nissan, which holds a significant stake in Mitsubishi, might even incorporate the latter into a broader partnership, but before that, they need to figure out what to do with the troublesome French shareholder Renault. A French patch that Nissan has been desperately trying to get rid of for many months.

For now, these discussions remain at an early stage, and nothing guarantees that an agreement will be reached. A merger would also pose significant challenges, such as potential job cuts, a minor detail that would be difficult to pass in Japan. Moreover, although this potential merger could lead to economies of scale and technology sharing, its short-term impact is doubtful. It would be more about limiting the damage by coexisting during this turbulent period than creating a new heavyweight player in the industry. Both companies will need to prove they can adapt to a rapidly changing market, and so far, that’s not a given…