Honda and Nissan consider a merger to combat EV rivals

Japanese auto giants Honda and Nissan are set to discuss a merger, amid stiff competition from the likes of Tesla and BYD. They'll explore operating jointly under a holding company, and possibly even bring Mitsubishi into the mix.

Nikkei Asia reported that both companies confirmed reports of the upcoming talks. Nissan said it is considering "various aspects of future collaboration" with Honda and Mitsubishi, "including the contents of the media reports... but nothing has been decided at this time."

It's been on both of the automakers' minds for some time now. Following a memorandum of understanding signed back in March, Nissan and Honda had partnered in August to research technologies for next-gen vehicle platforms. That same month, the pair also teamed up with Mitsubishi to "jointly discuss a framework for further intelligence and electrification of automobiles."

And it's not just electric vehicle (EV) bigwigs like Tesla threatening these three Japanese brands. Chinese marques have been steadily gobbling up their home turf, which happens to be the world's largest automobile market.

BYD's US$9,700 Seagull EV beat out Tesla's Model Y and literally every other car in China in sales last month, moving more than 56,000 units. Those two models were followed closely by two other BYD cars in the leaderboard for November.

Plus, the International Energy Agency estimates that EV sales will account for 40% of all cars worldwide in 2030, and nearly 55% in 2035. All that means the three brands in our story will have to ramp up their electrified offerings quickly, or eat the competition's dust in the very near future. If they came together, they'd be the world's third largest automaking group after Volkswagen AG and Toyota, with combined sales of more than 8 million vehicles.

Shareholders seem to think this is a good idea. Nissan's stock price soared on the Tokyo Stock Exchange as the news of the potential merger surfaced, opening at 417.6 yen ($2.7), 23.7% higher than the previous day's close.

The merger could be key to turning around a difficult period for Honda and Nissan. Both brands saw sales in China slump through 2024, and they've cut 10% and 20% of their global output capacity, respectively.

For what it's worth, both Honda and Nissan offer European and North American markets only a handful of EVs between them at the moment. While some of them have earned favorable reviews, low efficiency and range have marred ratings in certain publications. Mitsubishi also offers only two EVs at the moment on its home turf in Japan.

If the merger to build new EV platforms and appealing products goes through, maybe three heads will be better than one.

Source: Nikkei Asia