Honda and Nissan Plot Mega-Merger to Survive Electric Car Slowdown

In a bid to stay competitive in the rapidly evolving electric vehicle (EV) market, Japanese automakers Honda and Nissan are reportedly in talks to merge, according to multiple sources. The proposed merger, which could involve a third partner, Mitsubishi Motors, aims to create one of the world's largest auto groups, with combined sales of around 8 million vehicles annually. This strategic move comes as the two companies face mounting pressure from Tesla and Chinese EV leaders like BYD, which have surged ahead in the market.

The EV market growth has slowed worldwide, but Chinese brands are outpacing their US, European, and Japanese counterparts. Japanese automakers are losing market share in east and southeast Asia, with Chinese brands like BYD dominating the market. Honda and Nissan, along with domestic competitor Toyota, have added more hybrid models than full EVs to their product roadmaps, but the shift towards electric vehicles is undeniable.

The proposed merger between Honda and Nissan could significantly accelerate EV innovation and market penetration. Both companies have been working together on EV technology and software since March 2024, aiming to leverage each other's strengths. Honda's Zero EV platform and Nissan's Ariya model, along with Mitsubishi's EV expertise, could create a formidable portfolio. The combined sales of around 8 million vehicles annually would place the new entity among the world's largest automakers, enabling economies of scale and increased R&D investment.

The potential inclusion of Mitsubishi Motors in the merger further strengthens the new entity's competitive position in the EV market. With combined sales of around 8 million vehicles annually, the merged company would become one of the world's largest automakers, rivaling Toyota and Volkswagen. Mitsubishi's 24% stake, held by Nissan, brings additional resources and expertise to the table. Moreover, Mitsubishi's experience in developing affordable EVs complements Honda and Nissan's offerings, helping the new entity cater to a broader range of customers.



A Honda-Nissan merger could generate significant cost synergies and operational efficiencies. By combining their resources, the merged entity could achieve economies of scale in production, procurement, and R&D, leading to potential savings of up to $10 billion annually (Nikkei). These synergies can be reinvested into EV market growth by accelerating the development and launch of new EV models, expanding charging infrastructure, and enhancing battery technology. Additionally, the merged company could leverage its combined market share to negotiate better terms with suppliers, further reducing costs.

The proposed merger of Honda and Nissan, with potential inclusion of Mitsubishi, could create one of the world's largest automakers, with a market capitalization of approximately £41bn. This would place the company among the top global automakers, surpassing Ford and Vauxhall owner Stellantis, but still below Toyota, Tesla, and Volkswagen. The merger aims to help the companies better compete with Tesla and Chinese EV leaders like BYD, which have built up a significant lead in the industry.

In conclusion, the proposed mega-merger between Honda and Nissan, with Mitsubishi potentially joining, signals the growing pressure on legacy automakers to keep up with Tesla and other global electric vehicle leaders. The combined resources and expertise of the merged entity could accelerate innovation and market penetration in the EV sector, enabling the new company to better compete with established players and capture a larger share of the growing EV market. As the world shifts towards electric vehicles, this strategic alliance could prove crucial for the survival and success of these Japanese automakers in the face of intense competition.