Honda’s potential merger with Nissan would represent one of the biggest industry shake-ups since the creation of Stellantis in 2021. But there are also big risks.
During a roundtable with select media on Tuesday in Las Vegas, Honda executives offered more information on the merger, including how the combination of resources and plants could help the companies stay competitive in the increasingly competitive costly with China.
Honda is concerned about China’s meteoric rise as a dominant and highly competitive player in the EV and autonomous driving space. In late December, when Honda and Nissan announced that they had signed a memorandum of understanding to create a car company worth about $50 billion, Honda CEO Toshihiro Mibe said that “the rise of Chinese automakers and new players has changed a lot of the car industry. …We have to build the capabilities to fight them by 2030, or we will.”
Honda executives offered more information on the merger
The stakes are also high. According to a recent report from S&P Global Mobility, the global EV market will grow nearly 30 percent year-over-year, with 89.6 million new EVs expected to be sold this year. According to Allied Market Research, the global autonomous vehicle market is expected to reach around $60.3 billion in 2025 and is forecast to reach $448.6 billion by 2035. If Japanese manufacturers want to continue to dominate the market as they have since the 1960s, they have to iterate quickly and get products into the hands of consumers.
“Since the beginning of last year, we have been in talks with Nissan,” Noriya Kaihara, director and executive vice president at Honda, said through a translator after the company debuted two “production prototypes,” the Honda 0 Saloon and the Honda 0 SUV at CES. “Nothing has been decided, but we have discussed how to proceed.”
Honda wants Nissan’s big SUVs and underutilized factories
During the roundtable, Kaihara said Honda is looking to Nissan as a way to cut costs around future software-defined vehicles (SDVs).
“We have significant labor and development costs, and if there are operations we can share, that would be great for us,” he said. Brand new software development, he continued, including advanced driving systems that move closer to autonomous vehicles and battery electric vehicles, is even more important to the longevity of established automakers and increasingly expensive.
Honda also said Nissan’s large SUVs like the Armada and Pathfinder make it an attractive partner. Toshihiro Akiwa, VP and head of Honda’s BEV development center, said through an interpreter that Honda’s hybrid technology is solid but currently only exists in its midsize vehicles like the CR-V and Accord. The company is interested in Nissan’s larger vehicles because “Honda’s engine and battery capacity can fit into the larger vehicle.”
While Honda has the Prologue, that vehicle was part of a $5 billion joint venture with GM that only lasted through the development of two vehicles. The Prologue has been a surprise EV hit, selling over 33,000 in 2024 and outselling the larger gas-powered Honda Passport.
Since the partnership with GM went south, it’s unlikely the Prologue will be in production for long, though Honda hasn’t made any announcements about its plans for the vehicle. Honda doesn’t currently offer an all-electric crossover outside of the Prologue, though fans of the brand have been clamoring for an all-electric CR-V for years.
Nissan, on the other hand, saw its revenue fall by up to 90 percent last year, forcing it to lay off thousands of workers. The company has struggled since the arrest of former Nissan CEO Carlos Ghosn in 2018 for financial misconduct. Unsurprisingly, Ghosn is not happy about the news, tellingly Bloomberg that Nissan was in “panic mode,” calling the deal a “desperate move” and noting that “synergies between the two companies are hard to find.”
But as Honda executives pointed out at the roundtable, Nissan’s fight could present an opportunity for Honda as well. This is because Honda plants serving the US are currently operating at maximum capacity and they can use excess capacity at Nissan plants to meet customer demand. “I am unable to comment [on Nissan]but they have capacity,” Kaihara said.
Trump’s Tariff Threats and Loss of EV Incentives
President-elect Donald Trump’s threats to impose tariffs on foreign imports and eliminate federal subsidies that have helped save Americans billions in EV costs also came up in the conversation. “If Trump affects the government’s future strategy, we have to be very flexible when subsidies are cut or stopped,” Kaihara said.
This includes where Honda builds and manufactures its most popular vehicles like the CR-V and Civic. “Every plant in Canada and Mexico is almost at full production,” Kaihara said. “It is not so easy to change this direction, but depending on the tariff situation, we may have to change the production location to Japan or elsewhere.”
A major move like this would be costly and could translate into higher prices for consumers when they go to buy their next Honda.
Despite all this, Honda is not wavering in its commitment to electrification. “At the moment, we will have new EVs next year for the Zero series,” Kaihara said. “In the long term, I think, considering the environmental issues, EVs are going to be the solution for the future, and that’s not going to change.”
