Beyond Competition: Honda and Nissan’s Strategic Alliance for EV Development and chase Chinese rivals

Dew Briefs :

• Honda and Nissan collaborate on EV tech to cut costs through integration.
• Chinese competitors challenge Honda and Nissan in EV sector.
• Nissan struggles against Chinese companies due to cheaper resources and scale.

Diver Insights :

• Honda and Nissan, major Japanese car manufacturers, are collaborating on EV technology development to reduce costs through resource integration.
• Traditional manufacturers like Honda and Nissan are challenged by Chinese competitors in the EV sector.
• Nissan’s struggle to compete with Chinese companies is attributed to factors like cheaper resources and larger scale.
• Nissan’s CEO calls for breaking away from conventional approaches, while Honda’s president emphasizes the need for decisive action.
• The partnership between Honda and Nissan will extend globally, with no capital investment involved.
• Reports of a proposed merger between Honda and Nissan in 2019 were rejected by both companies.
• Chinese car manufacturers threaten Western car manufacturers, including those in Japan, due to their lower production costs.
• Honda closed its UK factory in 2021, while Nissan plans to manufacture the successor to the Leaf in Sunderland from 2026.

The memorandum of understanding between Nissan and Honda signifies their intent to explore a strategic partnership in vehicle electrification and intelligence, aiming to reduce EV costs and compete with Chinese players.

“Emerging players are very aggressive and are making inroads at incredible speed,”

“We cannot win the competition as long as we stick to conventional wisdom and a traditional approach,”

Nissan CEO Makoto Uchida told a press briefing

This collaboration could lead to shared EV platforms and powertrains, enhancing competitiveness. Both companies are gearing up to enter the EV market in India, with Honda’s ‘ACE’ project and Nissan’s plans to introduce affordable EVs alongside other models.

Honda and Nissan, two of Japan’s major car manufacturers, have decided to set aside their traditional rivalry and collaborate on electric vehicle (EV) technology development. This move comes as they aim to compete with Chinese automakers who have gained significant market share in the rapidly growing EV sector.

The memorandum of understanding signed by Honda and Nissan entails cooperation on various aspects of EV technology, including components and software, aimed at cutting costs through resource integration. Despite Nissan’s early entry into the EV market with the Leaf model, maintaining pace with Chinese competitors has been difficult due to factors like cheaper resources and greater scale.

Nissan’s CEO, Makoto Uchida, emphasizes the aggressive nature of emerging players and the necessity to break away from conventional approaches. Honda’s president, Toshihiro Mibe, stresses the urgency for decisive action in light of the rapidly changing landscape.

• Honda and Nissan have signed a non-binding memorandum of understanding to explore potential areas of collaboration.
• The scope of the collaboration has not yet been determined.
• Both companies are open to working together in Japan and overseas.
• Nissan’s existing alliances with Renault and Mitsubishi Motors will not be affected by a potential alliance with Honda.
• Nissan and Renault cooperate on electric vehicles (EVs) in Europe, with the next Nissan electric Micra sharing the same architecture as the new Renault Five.
• Nissan and Renault have reduced the scope of their alliance, and Renault has formed new partnerships with companies like China’s Geely.
• Both Nissan and Honda are open to collaborating with their existing partners if opportunities arise.
• The companies will explore cost-cutting measures, with Honda emphasizing the need for greater production levels to achieve cost-effectiveness.
• Honda aims to have electric vehicles and fuel cell vehicles account for 100% of its sales by 2040.

Beyond Competition, Honda and Nissan’s Strategic

With each company selling over 3 million cars globally, the partnership between Honda and Nissan is expected to extend across their operations in Japan and overseas. The non-binding nature of the agreement allows for flexibility, although it does not involve any capital investment.

Reports suggest that Japanese government officials proposed a full-scale merger between Honda and Nissan in 2019 to create a national champion, an idea swiftly rejected by both companies. David Bailey, a professor of business economics, highlights the threat posed by Chinese companies to Western car manufacturers, including those in Japan, citing China’s ability to produce cars at significantly lower prices.

In the UK, Honda closed its Swindon factory in 2021, while Nissan concluded production of the second-generation Leaf in Sunderland, with plans for its successor to be manufactured there from 2026.