Why Honda is merging with Nissan: factories, SUVs, and China
Honda’s potential merger with Nissan would represent one of the largest shake-ups to the industry since the creation of Stellantis in 2021. But there are huge risks involved, too.
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On Tuesday in Las Vegas, during a roundtable discussion with select media, Honda executives offered some more insight into the merger, including how combining resources and factories could help the companies stay competitive in the increasingly costly fight 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 an automotive company worth around $50 billion, Honda CEO Toshihiro Mibe said that the “rise of Chinese automakers and new players has changed the car industry quite a lot... We have to build up capabilities to fight with them by 2030, otherwise we’ll be beaten.”
The stakes are high, too. According to a recent report by 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 projected to reach $448.6 billion by 2035. If the Japanese automakers want to continue to dominate the market as they have since the 1960s, they have to iterate quickly and get products into consumers’ hands.
“Since the beginning of last year, we’ve been in conversation with Nissan,” Noriya Kaihara, director and executive vice president at Honda, said through a translator following the company’s debut of two “production prototypes,” the Honda 0 Saloon and the Honda 0 SUV at CES. “Nothing has been decided but we’ve been discussing how to proceed.”