Japanese Auto Giants Honda and Nissan Form Alliance to Accelerate EV Development

Nissan and Honda unite to join global software-defined EV race, play catch up with Tesla

Nissan and Honda building a software-defined EV? The Japanese automakers revealed a new partnership Thursday as they look to keep pace with Tesla and others leading the SDV movement. After confirming plans to partner up in March, Nissan and Honda are deepening their alliance. The Japanese automakers announced a new agreement to design and develop next-gen software-defined EVs. Nissan and Honda will work together to promote EV adoption with a focus on software-defined vehicles (SDVs). Like many rivals, the two believe that software (including autonomous driving, connectivity, and AI) will "determine the value of vehicles in the future." Nissan and Honda view the new tech as a "source of competitiveness." Nissan and Honda plan to design and develop tech to power next-gen SDV platforms. Over the next year, the two plan to complete basic research. Based on the results, they will "consider the possibility of mass production development." Nissan and Honda will also develop battery tech and e-Axles to power new global vehicles. In a separate press release, Mitsubishi announced it was joining the new alliance. "Mitsubishi Motors has unique technologies and expertise and has been collaborating with Nissan as a partner," Nissan's CEO Makoto Uchida said. Mitsubishi's CEO Takao Kato explained, "Collaboration with partners is essential in today's auto industry," with EVs and other tech rapidly developing. With Japanese automakers being some of the biggest laggards in the auto industry's shift to electric, it's no surprise they are partnering up. The Nissan, Honda, and Mitsubishi partnership comes as Tesla and Chinese EV makers like BYD continue expanding in key global markets, including Japan, taking market share. BYD is breaking into Japan's seemingly impenetrable auto industry. While domestic automakers like Toyota, Nissan, and Honda dominate the market, most imports have historically been from German luxury automakers like Porsche, BMW, and Mercedes-Benz. Although imports fell 7% in Japan through the first half of 2024, EV imports climbed 17%. BYD led the way, with imports surging 184% YOY, according to the Japan Automobile Importers Association. And that's just one market. BTD is quickly expanding into other key overseas markets like Thailand, Indonesia, Australia, Brazil, and Mexico, which are vital to Japanese exports. Nissan and Honda deepening their alliance (with Mitsubishi joining in) comes as Toyota, Japan's largest automaker, saw global sales slide 5% in June. Toyota's sales are down 0.9% through the first half of 2024, led by double-digit declines in China, Indonesia, and Thailand. The Japanese automaker blamed a "challenging market environment" and "intensified price competition" for the reason behind the fallout. BYD continues slashing prices, making it hard for foreign automakers to compete. BYD expects joint venture brands' share to fall from around 40% to 10% in China. Japanese automakers are not the only ones looking to play catch up with Tesla and BYD. American automakers like Ford have announced similar plans. Ford is working on a low-cost EV platform with software at its heart. Ford's CEO Jim Farley has warned multiple times that Tesla and Chinese EV makers are the "ultimate competition." Last month, Farley said he expects many rivals will turn to China for EV platforms.

Honda and Nissan join forces to research next-generation EVs

Honda Motor and Nissan Motor have officially banded together to research electrifying their automotive fleets. A third leading Japanese automaker, Mitsubishi, has entered into a memorandum of understanding with the other two automakers as they seek an advantage in the competitive electric vehicle market. In March, Nissan -- which owns about 34% of Mitsubishi -- and Honda began exploring a similar partnership to deal with the increasingly tough Chinese EV market and rivals like Tesla. The partners on Thursday separately said they have agreed to carry out joint research into new technologies and signed another memorandum of understanding to deepen their collaboration. They aim to conduct their research in about a year, the partners said in a statement. Nissan and Honda said Thursday that including Mitsubishi would provide "further synergies" and add new knowledge and strength to the partnership. "Through collaboration among the three companies, we expect the partnership to evolve into something that creates greater value, and to deliver unique products and services from each company that meet the diverse needs of customers," Nissan CEO Makoto Uchida said in a statement. Honda CEO Toshihiro Mibe noted that the auto industry is in a "once in a century" transformation, saying in a statement that the partnership will allow the companies to resolve issues more quickly. Collaboration with other automakers "essential in today's automotive industry," Mitsubishi CEO Takao Kato added in a statement. The partnership between Japan's second and third-largest automakers comes in response to their difficulty gaining ground in China's crowded EV market. Japan's biggest automaker, Toyota Motor, has also struggled, with sales in China falling almost 2% over the first half of 2024. The companies are focused on developing "core components" related to EVs like batteries, automotive software platforms, and other "complementary" products, that are both high-tech and cheaper than what they currently have. They're also focused on artificial intelligence and autonomous driving, noting that developing that technology will determine the value of vehicles in the future. The announcement comes just a day after China's biggest EV maker, BYD, signed a deal to provide up to 100,000 zero-emission vehicles to ride-hail provider Uber in Europe, Latin America, and several countries. Those firms plan to work together on deploying vehicles capable of self-driving on Uber's platform, noting that they are "well-positioned to bring autonomous vehicle technology" to a global audience. Tesla, which is working on a series of AI-related initiatives, is expected to heavily rely on robotaxis and its driver-assistance technology to boost profits in the future. Tesla bull Ark Investment Management has said that a potential fleet of self-driving Teslas used for ride-hail services could provide 90% of Tesla's revenue by 2029.

Honda-Nissan Alliance Completes Japan Car Industry Consolidation

Nissan, Honda and Mitsubishi have been behind the curve in moving to what automakers increasingly refer to as software-defined vehicles, which run on code as much or more than cars of the past were powered by combustion engines. The Japanese government set a target last month for its companies to account for 30% of the software-defined vehicle market in 2030. In addition to working together in software fields including automated driving, connectivity and artificial intelligence, the automakers may share battery specifications and supply. Honda and Nissan also are looking at re-badging one other's cars, which both combustion-engine and battery-powered vehicles under consideration. The two didn't offer specifics on particular models or outline how they may complement one another by region.