Honda, Nissan team up on electric vehicle challenge

Japanese automakers Nissan and Honda announced a surprising partnership to explore ea joint venture in electric vehicles (EVs) and other sectors. The collaboration aims to close the gap on Chinese competitors who have surged ahead in the EV market.

“Our goal is to accelerate progress towards environmental sustainability and zero traffic fatalities,” the companies said in a joint statement. “This requires strengthening our electric vehicle and environmental technologies, along with software development.”

The companies believe their combined strengths can propel them forward. “This partnership is about exploring the possibility of future collaboration,” the statement continued.

The focus of their initial study will be on developing electric vehicle software platforms, core EV components, and complementary products.

“The automotive industry is undergoing a once-in-a-century transformation,” said Honda director Toshihiro Mibe. “Our success hinges on whether the combined knowledge and technology of our companies can create new value and propel us to industry leadership.”

Nissan CEO Makoto Uchida acknowledged the changing landscape. “We face competition not just from traditional carmakers, but also from innovative new players with disruptive business models,” he said. “They’re capturing market share with competitive pricing and incredible speed. Sticking to the old ways won’t win this race.”

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Hybrid vehicles, which combine electric and gasoline engines, have been popular in Japan, making up 40 percent of sales in 2022. However, this focus has left Japanese firms lagging behind in the pure electric vehicle market that’s gaining momentum globally.

In 2022, a mere 1.7% of cars sold in Japan were electric, compared to roughly 15% in Western Europe and 5.3% in the United States. China, meanwhile, saw a whopping 20% of new car sales being electric vehicles in the same year. This EV strength helped China dethrone Japan as the world’s leading auto exporter in 2023.

According to media reports, both Honda and Nissan are even considering scaling back production in China due to declining sales.

“Neither company has the scale needed for sufficient profit margins,” explained Chris Redl, a Japanese auto analyst.

“This pressure is a major driver behind their partnership discussions. Historically, they’ve been fierce rivals, but collaborating with a Japanese company like Honda makes more sense than continuing cultural clashes with their existing alliance partner, Renault of France.”