Updated on: December 17, 2024 / 4:47 PM EST / CBS/AFP
Japanese automakers Honda Motor and Nissan Motor are reportedly entering merger talks to help them compete against Tesla and other electric vehicle makers, according to the Nikkei financial newspaper.
The two firms are considering operating under a single holding company, and are expected to sign a memorandum of understanding for the new entity, according to the Tokyo-based Nikkei.
The paper also reports that Honda and Nissan are considering bringing in Mitsubishi Motors, of which Nissan is the top shareholder, under the holding company to create one of the world’s largest auto groups.
In a statement to CBS MoneyWatch, Nissan said it has not announced the details in the report, but that the two companies “are exploring various possibilities for future collaboration, leveraging each other’s strengths,” which it announced in March.
Honda added that it didn’t provide the information in the report, according to a statement sent to CBS MoneyWatch. “As announced in March of this year, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other’s strengths,” it said. “We will inform our stakeholders of any updates at an appropriate time.”
Honda did not immediately respond to CBS MoneyWatch’s request for comment.
In March, Japan’s number two and three automakers, after rival Toyota, deepened ties when they agreed to explore a strategic partnership on electric vehicles.
Analysts characterized the move as one that is aimed at helping the automakers catch up with Chinese competitors, including BYD, which have captured more market share, while Japanese firms have lost ground by focusing more on hybrid vehicles.
China overtook Japan as the world’s biggest vehicle exporter in 2023, aided in part by its dominance in the electric car space.
Honda announced plans in May to double its investment in electric vehicles to $65 billion by 2030, as part of a target set three years ago of achieving 100% EV sales by 2040.
Similarly, Nissan in March announced that 16 of the 30 new models it plans to launch over the next three years would be “electrified.”
Climate concerns drive demand
The world’s auto giants are increasingly prioritizing electric and hybrid vehicles, with demand growing for less polluting models as concern about climate change grows.
At the same time, however, consumer demand for EVs has slowed amid high prices, range anxiety and developing infrastructure around charging points.
Hybrids that combine battery power and internal combustion engines have remained popular in Japan, accounting for 40% of sales in 2022.
But Japanese firms’ focus on hybrids has left them in the slow lane in meeting the growing appetite for purely electric vehicles. Just 1.7% of cars sold in Japan in 2022 were electric, compared to 15% in western Europe and 5.3% in the United States.
