Nissan, Honda Halt $60 Billion Merger Talks, Focus on Electric Vehicle Collaboration
In a dramatic turn of events, Japan’s automotive giants Nissan and Honda have officially ended discussions regarding their potential $60 billion merger, a deal that would have reshaped the global automotive landscape.
However, the two companies have reaffirmed their commitment to a strategic collaboration in the burgeoning electric vehicle (EV) sector, a move aimed at countering the rapid rise of Chinese EV manufacturers like BYD.
The potential merger, which would have catapulted the combined entity to become the world’s fourth-largest carmaker, just behind Toyota, Volkswagen, and Hyundai, fell apart due to strategic disagreements. Sources revealed that Honda’s proposal for Nissan to become a subsidiary under the merged entity was a key point of contention, stalling the negotiations.
Despite halting the merger, the automakers, along with their junior partner Mitsubishi Motors, have agreed to pursue a new partnership focused on advancing the development of electric and intelligent vehicles.
This strategic shift marks a significant pivot as both companies strive to compete against the global wave of Chinese EV dominance and face potential challenges in the U.S. market, including looming tariffs.
Nissan, which has been undergoing a comprehensive restructuring plan since November—including the elimination of 9,000 jobs and a 20% reduction in global production capacity—has already suspended operations at its Changzhou plant in China.
In the wake of the merger talks ending, sources suggest that Nissan remains open to forging new alliances, with a potential partnership with Taiwan’s Foxconn on the horizon. Foxconn has shown interest in acquiring a stake in Nissan as part of its own push into the automotive sector.
The speculation around the merger initially sent stock prices for both companies soaring—Nissan’s shares surged by 60% and Honda’s by 26% in December. However, those gains have since cooled, with Nissan’s stock climbing 21% and Honda’s by 11%.
Nissan, which continues to recover from the aftermath of former chairman Carlos Ghosn’s arrest in 2018, now finds itself with a market capitalization almost five times smaller than Honda’s. While both companies boasted a market cap of approximately 4.6 trillion yen a decade ago, Honda now stands at a robust 7.5 trillion yen ($48.6 billion), signaling the stark contrasts in their financial trajectories.
Though merger talks have been shelved, Nissan and Honda’s shared focus on electric vehicles underscores their determination to adapt to the shifting tides of the global automotive market, particularly as they seek to innovate in a rapidly evolving landscape.
The partnership is expected to play a pivotal role in the next generation of clean energy vehicles, even as both companies continue to navigate the competitive pressures of the industry.
