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Nissan looks set to abandon Honda merger as search for EV partner accelerates

February 7, 2025

Japan’s Honda and Nissan are reportedly in talks to merge under a single holding company. The deal, potentially involving Mitsubishi, aims to bolster competitiveness against booming Chinese EV makers and global industry consolidation.

Nissan appears ready to pull out of talks over a planned merger with Honda, valued at £46 billion, amid mounting tensions and a desire to find a better-suited ally for its push into electric vehicles (EVs).

The two Japanese carmakers announced in December they were exploring a tie-up alongside Mitsubishi to form the world’s third-largest automotive group by annual sales, but negotiations have stalled.

According to an individual with knowledge of Nissan’s strategy, the company is now pursuing alternative partners. This search could extend beyond traditional automotive groups, with Taiwan’s Hon Hai Precision Industry — better known as Foxconn — mooted as a potential candidate. Some Nissan board members reportedly view Foxconn favourably; however, sources suggest a US tech partner may ultimately be preferred.

A Honda–Nissan merger was originally seen as a response to intensifying competition in EV technology, particularly from Chinese manufacturers. Yet multiple obstacles, including the perceived imbalance between Japan’s second- and third-largest carmakers, appear insurmountable. Honda remains five times larger by market value, while Nissan has been battling turmoil, falling profits, and the legacy of offering hefty discounts in its key North American market.

Analysts say Nissan’s poor performance undermines its bargaining power. Todd Duvick, head of autos research at rating agency CreditSights, notes that if Honda were to acquire rather than merge, cost-cutting could lead to steep job losses, particularly among Nissan’s senior ranks. Such a takeover would also restrict the scope for Nissan’s existing shareholders to benefit from any turnaround.

Another complicating factor is the shareholding held by Renault, a hangover from the previously triumphant Renault–Nissan–Mitsubishi alliance headed by Carlos Ghosn before his dramatic arrest and subsequent flight to Lebanon. Nissan’s prolonged leadership struggles have exacerbated financial woes, prompting chief executive Makoto Uchida to plan 9,000 global job cuts as part of a restructuring drive.

Both Honda and Nissan will release their respective earnings on 13 February. Honda acknowledges “various discussions” are under way and expects to confirm or clarify plans by mid-February. Nissan has so far declined to comment.