Honda, Nissan to team on EVs to chase Tesla, China brands

TOKYO – Nissan and Honda want to cooperate in electric vehicles and explore commonized parts and joint procurement, as the Japanese carmakers strive to slash costs and emerge as a front-runner in the global EV race against rivals such as Tesla and entrants from China.

The two companies announced a memorandum of understanding about the tie-up on Friday at a news conference attended by Nissan CEO Makoto Uchida and Honda CEO Toshihiro Mibe.

Nissan, Japan's No. 3 automaker, and Honda, its No. 2, will consider jointly sharing and jointly procuring eAxles and other core EV components. The executives said their companies will also look at sharing battery technologies and software platforms.

The partnership comes as Japanese automakers rethink EV development and manufacturing, after falling behind global rivals from China, Silicon Valley and beyond. Teaming with other automakers is seen as a key strategy for achieving scale and sharing investment.

Synergies could be spread across some 7.65 million vehicles sold annually worldwide by both companies combined. But Uchida and Mibe said it was premature to set cost or volume targets.

Full details about the scope have yet to be determined. The companies will set up a feasibility group to study possibilities and report on areas with best potential in a “short amount of time.”

The planned partnership comes as Japanese automakers hustle to rethink EV development and manufacturing, after falling behind global rivals from China, Silicon Valley and beyond. Teaming with other automakers is seen as a key strategy for achieving scale and sharing investment.

"Can we survive? That’s the question," Mibe said of the industry's upheaval. "By 2030 we have to be a top runner, in a position to fight against the top players."

Nissan's Uchida echoed the sentiment, saying scale and cost were key focal points of possible cooperation. Both companies must think outside the box to reinvent their businesses.

"We cannot afford to be complacent," Uchida said. "Emerging players are making inroads with high competitiveness and totally different business models."

For the time being, the companies have no plans to share products or rebadge vehicles, the executives said. Capital crossholdings are also out of the scope of discussion for now, though they said they would not close the door on such ideas down the road.

Regions of cooperation are not confined to Japan. They may also expand to North America, where both Nissan and Honda have mammoth operations and to Europe with electric vehicles will be needed to meet regulations and both companies are still small volume players.

For Nissan, which is preparing to announce a new mid-term plan by the end of this month, a fresh partnership in the EV segment could help it defray cost and boost volume. Slashing cost and improving production efficiency is seen as key to their competitiveness in EVs.

"The question is finding a partner so our supplier base is efficient enough to sustain our goals in electrification," one top-level official said, asking not to be identified revealing private discussions. "We need to accelerate electrificaiton and acceleration means investment and that requires achieving scale. For us, what is most important is making the supplier base more efficient."

Uchida and Mibe declined to speculate about cost savings or vehicle volume targets.

But the scale could be significant. Nissan plans to sell 3.55 million vehicles in the current fiscal year ending March 31. Honda plans to sell 4.1 million vehicles.

Still, that combined tally of 7.65 million falls far short of Toyota's target of 9.45 million for the current fiscal year. And Toyota’s group volume expands by several more million when its Japanese partners Subaru, Mazda and Suzuki are added to its mix.

Nissan, which is struggling to boost global volume, is looking to jumpstart its flailing electric EV program. The company was once a pioneer in EVs, with the 2010 launch of the mass-market Leaf. But now it has only three main EV nameplates in the lineup, the Leaf, Ariya and Sakura minicar.

Honda, meanwhile, is the only Japanese automaker to commit to fully phasing out internal combustion engines. It wants to introduce 30 EVs globally by 2030 and sell nothing but pure electric or hydrogen fuel cell vehicles by 2040. In January, Honda announced a new line of global EVs called the Honda 0 Series that begins with a sedan in the U.S. in 2026.

The two companies are known for having disparate corporate cultures, especially in their handling of supplier relations. Honda is known as more collaborative with suppliers, while Nissan is considered more confrontational. Nissan is more accustomed to working in tight partnerships, due to its long-running alliance with Renault. Honda is more protective of its autonomy.

Uchida and Mibe acknowledged the cultural differences, but said they could be managed. "Of course, it’s a different company so it has a different culture," Mibe said of Nissan. "But the assumption is that we can overcome these barriers. Even though there are different cultures, there are also commonalities."

Finding friends

Nissan and Honda have both seen partnerships as key to bearing the burden of spiraling vehicle development costs. Nissan has long partnered with French carmaker Renault and has a controlling stake in Japanese automaker Mitsubishi Motors. Honda has teamed with General Motors on EVs and fuel cell vehicles. Honda also has an EV joint venture with Japanese electronics giant Sony.

But Nissan and Renault rebalanced their crossholdings last year, given each an equal 15 percent stake in the other. This opened the door for Renault and Nissan to explore other partnerships.

At the same time, Honda and General Motors said late last year that they were abandoning plans to jointly develop entry-level EVs because they could not find an effective cost structure.

Now Honda and Nissan are looking in their own back yards for Japanese partners.

It is not the first time a tie-up between Nissan and Honda has been floated. After the arrest and ouster of former Nissan Chairman Carlos Ghosn in 2018, the idea of a capital relationship between Nissan and Honda was discussed, only to fade away.

The idea of Nissan and Honda joining forces is seen as an abiding term ambition of bureaucrats in the automotive division of Japans power Ministry of Economy, Trade and Industry.

But Nissan's complicated relationship with Renault, stretching back to 1999, and Honda’s fierce independent streak have long been stumbling blocks to close cooperation.

Japanese supplier Hitachi Astemo could function as an important bridge between the two. The parts maker was formed in 2021 by combining Hitachi Automotive and a group of Honda suppliers.

Today, Honda has a 40 percent stake and electronics parent company Hitachi has a 40 percent stake. Hitachi Automotive had a long history of supplying Nissan, and the successor company Hitachi Astemo delivers eAxles and electrified vehicle components to Honda and Nissan.

Nissan has a history of successful joint procurement dating back to the early days of its alliance with Renault. For many years, joint purchasing with Renault was a bright spot of their partnership.