TOKYO – Nissan and Honda are forming a new bloc of Japanese automakers focused on next-generation, software-defined vehicles with plans to bring Mitsubishi Motors into a three-way mix that will fight in the global EV race against such rivals as Tesla and entrants from China.
Nissan and Honda will research a joint software operating system for autos over the next year with an eye to putting it into mass production sometime after 2027.
The partners will immediately start jointly procuring electric motors and inverters, and then move into joint procurement of e-Axles. By the end of the decade, they also plan to commonize specifications for EV batteries so they can be interchangeable between the brands.
In North America, Nissan wants to source locally manufactured lithium ion batteries for its EVs from Honda's joint venture with LG Energy Solution from 2028.
Meanwhile, the companies will also study supplying each other with product. The Japanese partners have already reached a basic agreement on what models to jointly supply and in what regions to do so. The companies said they would give details on product sharing at a later date.
Finally, to further drive scale and share cost burdens, Nissan and Honda said they signed a memorandum of understanding to add Mitsubishi to the framework.
Finding friends
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The burgeoning alliance was outlined Aug. 1 in a joint news conference by Nissan CEO Makoto Uchida and Honda CEO Toshihiro Mibe. It fleshes out an announcement from March 15 in which the erstwhile Japanese competitors said they would explore closer cooperation.
Nissan, Japan's No. 3 automaker, and Honda, its No. 2, are joining forces as Japanese automakers fall 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.
"If companies cannot cope with the circumstances, they will not survive," Mibe said. "We have to make the move right now or we won't be able to catch up."
Synergies could be spread across some 7.65 million vehicles sold annually worldwide by both companies combined.
Adding Mitsubishi's 815,000 brings the total scale to about 8.5 million. Nissan has held a controlling stake in Mitsubishi since 2016, and teaming with Honda would further delineate the three as one of two emerging automaking camps in Japan.
"This cooperation between the three will be a strong weapon," Mibe said.
On the other side is a bloc of manufactures aligned with Toyota, including Subaru, Mazda and Suzuki. Toyota, the world's biggest automaker, marshals annual volume of more than 11 million vehicles just by itself. But its three partners chip in another 5.3 million vehicles or so.
Uchida said scale and speed are the key to competitiveness in the EV age.
"If we want to increase our competitive edge, we need to increase the number of friends on our side," the Nissan chief said. "That the direction the car industry is headed."
Nissan and Honda are first deciding on what they want to achieve together before they decide how to do it, Uchida said. That includes how to share the costs and how to invest.
Tech challenge
Right now, the companies haven't discussed capital crossholdings between each other. But Mibe isn't ruling that out down the road. The partners are considering many options, perhaps including even setting up a new company, he added. That is one approach Honda has already taken, establishing its own, separate EV venture with electronics and tech giant Sony.
Coming out with more concrete details just four months after floating the partnership is an encouraging step, said Christopher Richter, lead Asia auto analyst at CLSA in Tokyo.
But the big test will be whether the old-guard metal benders can truly think outside the box.
"The idea of move fast and break things doesn't seem to have really taken root here," Richter said. "It's still a very gradualist approach. They need someone outside the traditional automotive way of thinking. They need someone who is going to come up with radical ideas."
Nailing a software operating system for cars is seen as crucial to unlocking the full potential of modern mobility and catching up to the software-rich innovations coming from China.
Developing such systems costs trillions of yen (billions of dollars), Mibe said.
"Software development costs are going to be enormous," Mibe said. "If we are going to split the software investment, that's going to be big savings on even just that portion."
Nissan and Honda will research a next-generation software system over the next year. If it can be put into mass production, the partners could install it in vehicles as soon as 2028, Mibe said.
"It will be a significantly big evolution beyond what we're doing today," he said.
Key suppliers
On EV components, both companies will get their motors and inverters from their shared mega-supplier Hitachi Astemo. The Japanese parts maker was formed in 2021, combining Hitachi Automotive and a group of Honda suppliers.
Today, Honda holds a 40 percent stake and electronics parent company Hitachi carries 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, 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. 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 handling 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.
But a shared sense of urgency is now driving Nissan and Honda in the same direction, Uchida said. "One plus one should equal more than two," he said. "That is what we are expecting."
