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Honda, Nissan team up on EVs to take on China juggernaut

Bloomberg
Bloomberg • 2 min read
Honda, Nissan team up on EVs to take on China juggernaut
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Honda Motor Co and Nissan Motor Co are teaming up to develop electric car technology, seeking to keep up with their Chinese counterparts in the rapid shift toward clean energy.

The carmakers will collaborate on core technology for battery-based electric vehicles, including software, they said in a statement Friday, adding that a memorandum of understanding for the strategic partnership has been signed.

Japanese manufacturers have been met strong competition in China from local newcomers, forcing them to cut back production and staffing or, in the case of Mitsubishi Motors Corp, pull out altogether. Honda and Nissan are reportedly planning to slash production capacity in the world’s biggest auto market as sales fall, while China’s BYD Co revealed plans this month to roll out new models and expand its dealership network in Japan.

The carmakers will decide on whether to eventually forge a joint venture and in which regions they’ll collaborate, Honda President Toshihiro Mibe said at a news conference to announce the partnership. The companies entered into discussions in mid-January amid fast-changing business environment, he added. 

“New players are surfacing in the market and we realize that companies that are unable to deal with them won’t survive,” said Mibe, citing the different corporate cultures of Nissan and Honda as a challenge to overcome.

The deal is advantageous because “both the parties are in trouble,” said Seiji Sugiura, senior analyst at Tokai Tokyo Intelligence Laboratory Co. If they collaborate on batteries, that “will save them a lot of cost,” he said.

See also: China’s EV makers taking longer to pay bills amid rising stress

“It’s interesting to think of the various ventures the duo will be doing together in the future as a force against Toyota,” Sugiura said.

After BYD surpassed Elon Musk’s Tesla Inc last year as the world’s top EV maker, the pressure is on legacy brands to catch up.

Honda last year shelved plans to develop budget-priced battery-powered cars with General Motors Co. The two automakers also are likely to delay deployment of self-driving taxis in central Tokyo, after GM’s Cruise unit grounded its entire US fleet after its California license was suspended.

See also: Hyundai brings back car assembly with highly-automated EV plant

“We realize there is not much time left (to take an action) amid fast-changing environment,” said Nissan CEO Makoto Uchida, adding that the company’s alliance with Renault SA and Mitsubishi Motors will remain unchanged.

 

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