Nissan and Honda: A Merger for Survival in the EV Era

The automotive industry is on the cusp of a seismic shift, with electric vehicles (EVs) and software-driven cars set to dominate the market. In this rapidly evolving landscape, two Japanese giants, Nissan and Honda, have announced plans to merge by 2026, aiming to create the world's third-largest automaker by sales. This strategic alliance is not just another deal; it's a make-or-break move for both companies to survive and thrive in the face of intense competition from the likes of Tesla and BYD.

The merger, which will see the two companies combine operations under a joint holding company, is expected to bring significant synergies. By streamlining their respective businesses, Nissan and Honda aim to slash development costs and pump cash into EVs, autonomous driving, and software innovation. This will enable them to better compete with established and emerging players in the global automotive market.

One of the key benefits of the merger is the opportunity to leverage shared technology and R&D resources to drive innovation in electric vehicles and autonomous driving. Honda's strength in EV technology and Nissan's leadership in autonomous driving can be combined to create a formidable force in the global automotive market. This strategic alliance can lead to cost savings, faster innovation, and enhanced competitiveness in the rapidly evolving EV and autonomous driving landscape.



The integration of Nissan's and Honda's production and supply chain networks is also expected to lead to cost savings and improved efficiency. By combining their operations under a joint holding company, they can streamline factories, reduce duplication, and optimize resource allocation. According to Honda CEO Toshihiro Mibe, the combined entity is forecasted to achieve an operating profit of over ¥1 trillion, eventually climbing to ¥3 trillion. This integration will enable them to better compete with Toyota at home and Chinese automakers abroad, such as BYD and Geely.

However, the success of this merger hinges on effectively combining their businesses and addressing pressing issues like factory closures or streamlining. Nissan's turnaround is a critical piece of the puzzle, and skeptics like ex-CEO Carlos Ghosn are already throwing shade, calling the merger a mismatch with too much duplication. Nevertheless, both Honda CEO Toshihiro Mibe and Nissan's Makoto Uchida are betting big on this alliance, calling it a make-or-break move in an industry undergoing a once-in-a-century transformation.



In conclusion, the merger between Nissan and Honda is a strategic move aimed at survival in the EV era. By combining their respective strengths and resources, the two companies hope to create a global powerhouse capable of taking on the likes of Tesla and BYD. While challenges lie ahead, the potential synergies and opportunities for innovation make this alliance an exciting development to watch in the automotive industry. As investors, we should keep a close eye on the progress of this merger and its impact on the global automotive market.