Honda and Nissan Discuss Merger to Compete with Tesla

Japanese carmakers Honda and Nissan are reportedly discussing a merger to better compete with electric vehicle (EV) leaders like Tesla.

According to a report by Nikkei, the two companies aim to create a single holding company and may include Mitsubishi Motors, in which

Nissan holds a significant stake, to form one of the largest global car groups. Both Honda and Nissan responded cautiously, stating that they are exploring collaboration options but have not confirmed the details in the report.

The potential merger comes as Japanese automakers face pressure to catch up with competitors in the EV market. Companies like China’s BYD have gained a significant lead in producing affordable EVs, while Japanese firms have been slower to shift from hybrids to fully electric vehicles.

In 2023, China overtook Japan as the largest exporter of vehicles globally, largely due to its dominance in electric car manufacturing.

Honda and Nissan have already signaled their commitment to electronic vehicles. Honda announced in May plans to double its EV investment to $65 billion by 2030, aiming for 100 percent sales by 2040.

Nissan has similar goals, with plans to release 16 new “electrified” models out of 30 by 2026. However, challenges in the EV market, such as high costs, limited charging infrastructure, and range concerns, remain significant obstacles.

 

Despite growing global demand for the vehicles, hybrids continue to dominate in Japan, accounting for 40 percent of car sales in 2022, while fully electric vehicles make up just 1.7% of sales.

In contrast, EV sales in Western Europe reached 15%, and 5.3% in the U.S. This reliance on hybrid technology has slowed Japanese firms in adapting to the global shift toward purely electric models.

The merger discussions reflect the urgency for Japanese automakers to pool resources and expertise to stay competitive. Combining efforts under a single entity could help Honda, Nissan, and possibly Mitsubishi strengthen their position in the fast-evolving global EV market.

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