Honda and Nissan's discussions for a strategic merger have come to an abrupt end, marking a significant shift in the landscape of the electric vehicle (EV) market. The talks, which began in March last year, aimed to create a formidable alliance to counteract the growing dominance of Chinese manufacturers in the EV sector. However, the two Japanese automotive giants were unable to reach an agreement on a multi-billion-dollar tie-up deal.
The potential partnership between Honda and Nissan was devised as a response to the increasing influence of Chinese companies like BYD, which have been making substantial inroads in the global electric car market. Honda's chief executive, Toshihiro Mibe, underscored the urgency of this alliance by stating that it was necessary to combat "the rise of Chinese power" in the industry.
"The talks started because we believe that we must build up capabilities to fight them, including the current emerging forces, by 2030. Otherwise we will be beaten" – Mr Mibe
Nissan, Japan's second-largest car company, has been grappling with slowing sales in key markets such as China and the United States. In November, the company surprised shareholders with plans to lay off thousands of workers as part of its strategy to recover from declining sales and internal executive turmoil. The proposed merger with Honda promised to provide much-needed relief and stability for Nissan.
The collapse of the merger talks leaves both companies to face the challenges posed by the competitive EV market individually. While Honda and Nissan had aimed to establish a new industry giant alongside Toyota, Volkswagen, General Motors, and Ford, their inability to finalize the deal has left room for potential investors. Notably, Taiwanese technology giant Foxconn has emerged as a possible ally for Nissan.
Foxconn's chairman, Young Liu, has expressed interest in investing in Nissan by purchasing shares if it facilitates cooperation between the two entities.
"If cooperation requires it (purchasing Nissan shares), we will consider it" – Young Liu
The failure of the merger talks highlights the formidable challenge posed by Chinese manufacturers in the electric vehicle domain. As Honda and Nissan navigate their paths forward independently, they will need to devise new strategies to bolster their competitiveness in a rapidly evolving market.