Japanese automakers Honda Motor and Nissan Motor are entering merger talks to help them compete against Tesla and others electric vehicle manufacturers, according to the Nikkei financial newspaper.
The two firms are considering operating under a single holding company and are expected to sign a memorandum of understanding for the new entity, according to Tokyo-based Nikkei.
The document also reports that Honda and Nissan are considering bringing Mitsubishi Motors, of which Nissan is the main shareholder, under the holding company to create one of the world’s largest automotive groups.
In a statement to CBS MoneyWatch, Nissan said it has not announced details of the report, but that the two companies are “exploring various possibilities for future collaboration, building on each other’s strengths,” which it announced in march
Honda added that it did not provide the information in the report, according to a statement sent to CBS MoneyWatch. “As announced in March this year, Honda and Nissan are exploring various possibilities for future collaboration, building on each other’s strengths,” he said. “We will inform our stakeholders of any updates in due course.”
Honda did not immediately respond to CBS MoneyWatch’s request for comment.
In March, Japan’s number two and three carmakers, after rival Toyota, deepened ties when they agreed to explore a strategic partnership on electric vehicles.
Analysts characterized the move as one aimed at helping automakers catch up with Chinese competitors, including BYD, which have gained more market share while Japanese companies have lost ground in focus more on hybrid vehicles.
China surpassed Japan as the world’s largest vehicle exporter in 2023, helped in part by its dominance in the electric car space.
Honda announced plans in May to double its investment in electric vehicles to $65 billion by 2030, as part of a three-year-old goal of achieving 100 percent electric vehicle sales by 2040.
Similarly, Nissan announced in March that 16 of the 30 new models it plans to launch over the next three years would be “electrified.”
Climate concerns drive demand
The world’s auto giants are increasingly prioritizing electric and hybrid vehicles, and demand for less polluting models is growing as concerns about climate change grow.
At the same time, however, consumer demand for electric vehicles has slowed amid high prices, range anxiety and infrastructure development around charging points.
Hybrids that combine battery and internal combustion engines have remained popular in Japan, accounting for 40% of sales by 2022.
But Japanese companies’ focus on hybrids has left them on the slow path to satisfying the growing appetite for purely electric vehicles. Just 1.7 percent of cars sold in Japan in 2022 were electric, compared with 15 percent in Western Europe and 5.3 percent in the United States.