Honda Nissan Merger Talks Highlight EV Industry Pressures

• Honda and Nissan merger talks focus on deeper EV collaboration to tackle fierce competition from Tesla and Chinese automakers.
• US tariffs and trade policies could complicate a potential Nissan Honda merger, raising regulatory challenges.
• Mitsubishi Motors, with Nissan’s 24% stake, may join the merger, adding resources and complexity.

Honda and Nissan are in talks to join forces under one holding company. While both companies insist no merger has been announced, reports from Nikkei suggest they’re exploring closer collaboration to keep up with the rapidly changing automotive industry.

So, what’s driving this conversation? In a word: survival.

Honda and Nissan Weigh Deeper Collaboration Facing EV Challenges

The auto industry is under intense pressure. Tesla’s aggressive pricing and the rapid growth of Chinese automakers like BYD have created fierce competition, while demand for electric vehicles (EVs) in Europe and the U.S. has slowed. This combination of challenges is forcing traditional automakers to rethink their approach, and for Honda and Nissan, working together could be the strategy that helps them stay competitive.

Honda and Nissan have already dipped their toes into partnership waters. Back in March, the companies announced plans to collaborate on EV technologies. In August, they took it further, agreeing to work together on batteries, e-axles, and other core components. A potential merger under a holding company would significantly deepen this relationship.

Does this mean a full merger is happening? Not quite. Both companies are keeping their cards close to the chest for now. As announced in March of this year, “The two companies have reached the understanding based on the belief that it is necessary to combine their strengths and explore the possibility of future collaboration,” said representatives from both automakers.

Honda and Nissan Face Challenges in EV Market and Global Sales

Honda and Nissan are fighting to stay relevant in a fiercely competitive market. Honda currently holds a market value of $39.06 billion, while Nissan stands at $9.93 billion, according to CompaniesMarketCap. Together, they sold 7.6 million vehicles globally in 2023.

In the electric vehicle segment, Honda sold 14,179 units of the Honda Prologue in 2024, while Nissan sold 22,478 EVs, including 7,581 Nissan LEAF models and 14,897 Nissan ARIYA models, according to Cox Automotive.

However, the challenges are mounting, especially in China, where local brands are outpacing them, leaving their market share dwindling.

To add another layer of complexity, Nissan’s financials have been underwhelming. In November 2024, the company announced an emergency turnaround plan, slashing its annual operating profit forecast by 70% to 150 billion yen ($975 million). This marked its second downward revision after a 17% cut earlier in the year. Additionally, Nissan revealed plans to cut 9,000 jobs and reduce global production capacity by 20%.

Honda Nissan Merger Talks Face US Tariff Hurdles and Speculation

Should the merger happen, it could face challenges, particularly in the United States. Trade policies and potential tariffs from the Trump administration may complicate negotiations. Historically, tariffs on Japanese vehicles have been a heated issue, and any agreement between Honda and Nissan might come with demands to clear regulatory hurdles. 

There’s also speculation about Mitsubishi Motors joining the mix. As Nissan’s largest shareholder with a 24% stake, Mitsubishi could bring additional resources to the table. However, they’ve yet to make an official comment on the matter.

As the details unfold, the automotive world is watching closely. The future of this industry depends on how well companies can adapt and work together, and Honda and Nissan appear to grasp the urgency. Whether these talks result in a full merger or a closer collaboration, they have no time to waste.

Time will tell, but when companies of this scale start exploring such big changes, you can bet the world is paying attention.

IMAGES: NISSAN, HONDA

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