The breakdown of the $60 billion merger talks between Nissan and Honda has significant implications for their electric vehicle strategies, as both companies face intense pressure from rising competition in the EV market, particularly from Chinese automakers.
With the failure to form a $60 billion auto giant, Nissan now faces deeper uncertainty about its future, while Honda remains confident in its independent approach to electric vehicle expansion, Reuters news report indicated.
Honda has laid out aggressive electrification targets, aiming to produce more than 2 million EVs per year by 2030, with 40 percent of new car sales coming from electric or fuel-cell vehicles by the same year. By 2040, the company plans to transition entirely to EVs and FCVs.
In addition, Honda is doubling down on hybrid technology, targeting 1.3 million hybrid sales annually by 2030 — double its 2023 levels. The company’s electrification roadmap suggests a well-structured long-term vision that aligns with growing global demand for zero-emission vehicles.
Nissan, once an EV pioneer with the introduction of the Leaf in 2010, has struggled to maintain its position as a leader in the segment. While the company still aims for EVs and hybrids to make up 60 percent of its global sales by 2030, its current financial struggles and recent restructuring efforts pose challenges to achieving this goal.
Nissan’s failure to secure a merger with Honda leaves it without a strong “dance partner” to share the high costs of EV development, battery production, and software integration — key areas where automakers are investing billions to stay competitive.
The collapse of the deal also highlights the broader difficulties faced by Japanese automakers as they compete with Chinese brands like BYD, which have been rapidly gaining market share with more affordable and technologically advanced EVs.
Chinese automakers have aggressively integrated software-driven features and developed a stronger supply chain for key EV components, particularly batteries. Nissan and Honda, along with other legacy automakers, are under increasing pressure to keep pace with the rapid technological advancements being made in China.
Additionally, Japan’s automakers face regulatory hurdles, particularly in the U.S., where potential tariffs on vehicles imported from Mexico — a key manufacturing hub — could impact their profitability. This adds another layer of complexity to Nissan’s challenges, as the company has already been struggling to turn around its financial situation. The automaker recently cut its full-year forecast for the third time and announced further cost-cutting measures, including the planned closure of three manufacturing plants and a reduction in global capacity by 20 percent.
Despite the setback in merger talks, Nissan and Honda will continue their existing partnership, which includes Mitsubishi Motors, to collaborate on technology and other areas. However, analysts question whether this collaboration will be enough to shield them from the dominance of Tesla, BYD, and other fast-moving EV manufacturers. Some experts argue that without deeper consolidation or new strategic alliances, Nissan and Honda risk falling behind in the global transition to electric mobility.
With Nissan seeking new partnerships to bolster its EV efforts, Taiwan’s Foxconn has emerged as a potential candidate for collaboration. Foxconn Chairman Young Liu recently stated that his company would consider taking a stake in Nissan, but that its primary goal was cooperation rather than acquisition. If a partnership materializes, it could help Nissan accelerate its EV ambitions by leveraging Foxconn’s expertise in battery technology and electronics manufacturing.
In contrast to Nissan’s uncertain path, Honda remains in a strong position with a clear electrification roadmap and relatively stable financial health. The company has the resources to independently invest in next-generation EV technology, and its existing partnerships — such as with General Motors on battery development — provide additional support for its transition to electrification.
Baburajan Kizhakedath