What a Honda and Nissan merger could mean for you and the future of EVs

Honda and Nissan are weighing a merger amid an intense battle to capture the future electric vehicle market, potentially building the world’s largest carmaker by sales.

The Japanese car giants revealed they had signed a memorandum of understanding (MOU) on a potential business integration, along with smaller Nissan alliance member Mitsubishi Motors.

They said a tie-up would potentially help them ‘maintain global competitiveness’ and deliver ‘more attractive’ products and services as the vehicle industry experiences a massive upheaval.

A merger between the longtime competitors – who are also Japan’s second and third-largest carmakers (behind Toyota) – and Mitsubishi would create a business worth over $50billion in market capitalisation. 

It would also take the battle to the band of emerging Chinese carmakers that are staking a big claim in major Western markets.

Why do Honda and Nissan want to merge?

Honda and Nissan agreed to consider collaborating on developing EV technology in March before deciding at the beginning of August to conduct joint research on autonomous driving and share components for EVs such as batteries. 

The firms say the deal would offer the standardisation of vehicle platforms, which would lower costs and create stronger products, optimise factories, and integrate research and development functions. 

Makoto Uchida, chief executive of Nissan, said: ‘I believe that by uniting the strengths of both companies, we can deliver unparalleled value to customers worldwide who appreciate our respective brands.

‘Together, we can create a unique way for them to enjoy cars that neither company could achieve alone.’

How could a Honda and Nissan merger affect the car market? 

Traditional carmakers are struggling to compete with upstart electric vehicle makers, particularly those from China, which dominate the rapidly expanding EV market.

Chinese EV firms have benefited from generous government subsidies, tax breaks, and China’s access to critical raw materials such as graphite and refined rare earth metals.

Shenzhen-headquartered BYD overtook Elon Musk’s Tesla to become the world’s biggest-selling EV manufacturer last year after selling more than 3 million cars.

The Nissan Leaf was the world’s most popular electric vehicle during the early 2010s, but its popularity has dwindled amidst heightened competition, contributing to Nissan’s severe financial difficulties.

What would this mean for car buyers?

Major car makers have staged a wave of tie-ups as they have faced tougher conditions in recent years and try to cope with the shift to electric power. 

The huge Stellantis group has 14 brands under one umbrella after it was formed by a combination of PSA Group – made up of Peugeot and Citroen – General Motors’ European arm of Opel and Vauxhall, Fiat, Alfa Romeo, Maserati and more.

Stellantis recently saw its boss Carlos Tavares stand down and say it would stop making vans at the Luton Vauxhall plant.

Carmakers face major competition from Chinese brands, which, although they still have only a relatively small market share, are gaining ground with each year, aided by subsidies and strategy from China’s government.

A Nissan-Honda merger would allow the two car firms to share research and development resources, vehicle platforms, electric powertrains and tech, reducing costs and boosting firepower.

Car buyers would be likely to see some similarities in vehicles in years to come but should still see two distinct brands operating. Both would continue to operate dealerships, servicing existing cars and looking after customers.

Why is Nissan struggling? 

Last month, Nissan announced it would axe 9,000 jobs and cut global production capacity by a fifth as it posted a £47.2million third-quarter loss.

Soon afterwards, Fitch Ratings lowered Nissan’s credit outlook to ‘negative,’ citing the firm’s falling profits and weaker-than-expected performance in North America.

Honda also revealed last month that its first-half profits slumped by around 20 per cent to $3.2billion due to declining sales volumes in China.

Toshihiro Mibe, president of Honda, said: ‘Bringing together the resources including knowledge, talents, and technologies that Honda and Nissan have been developing over the long years is essential to overcome challenging environmental shifts.’

What would this mean for UK carmaking?

The Sunday Times reported that Honda could make vehicles at Nissan’s prominent Sunderland plant as part of a tie-up, having stopped all car production in the UK three years ago.

Nissan warned last month that zero-emission car targets will have an ‘irreversible impact’ on the British motor industry.

After holding crisis talks with the Government, the Japanese manufacturer said electric vehicle quotas would risk thousands of jobs and billions of pounds in investment.

Guillaume Cartier, chair of the Nissan Africa, Middle East, India, Europe and Oceania region, said: ‘It risks undermining the business case for manufacturing cars in the UK, and the viability of thousands of jobs and billions of pounds in investment.

‘We now need to see urgent action from the Government by the end of the year to avoid a potentially irreversible impact on the UK automotive sector.’

Nissan employs around 7,000 people in the UK, including 6,000 at the country’s largest carmaking plant in Sunderland.

Last week, it was revealed that British car production had plunged to its lowest level in more than 40 years.

That came as ministers were under pressure to relax electric vehicle targets amid warnings from the industry they could result in factory closures and job losses. 

Around 64,216 new cars rolled off UK production lines last month, down 30 per cent from last year, according to industry body the Society of Motor Manufacturers and Traders (SMMT). 

It was the worst monthly performance for the industry since 1980, when Britain was gripped by industrial unrest and soaring inflation. 

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