Japan’s second and third-largest automakers, Honda and Nissan, have decided to end merger discussions, despite reaffirming their commitment to working together on electric vehicle (EV) development amid growing global competition.

In a joint statement on Thursday, the companies announced the termination of their memorandum of understanding (MOU) signed on December 23 last year, which had outlined plans for a potential business integration.

The abandoned deal, valued at approximately $60 billion, would have made them the world’s third-largest automaker.

Industry analysts saw the proposed merger as an effort to compete with Tesla and leading Chinese EV manufacturers in the rapidly evolving market.

Nissan reportedly backed out of the talks with larger rival Honda after negotiations were complicated by growing differences, including Honda’s proposal that Nissan become a subsidiary, sources had previously told the Reuters news agency.

In the joint statement, the automakers confirmed Honda “proposed changing the structure from establishing a joint holding company… to a structure where Honda would be the parent company and Nissan the subsidiary through a share exchange”.

As a result of the talks, both companies concluded that “it would be most appropriate to cease discussions and terminate the MOU,” the statement said.

They will, however, continue to “collaborate within the framework of a strategic partnership aimed at the era of intelligence and electrified vehicles, striving to create new value and maximise the corporate value of both companies”, it added.

The automakers, and junior partner Mitsubishi Motors, had announced they would consider the merger late last year. Sources later told Reuters that Mitsubishi was unlikely to participate.

Honda and Nissan have seen their industry and the key China market upended by the rapid rise of Chinese electric vehicle makers such as BYD, and both are facing the prospect of tariffs in the US, another key market.

With the collapse of merger talks, Nissan is now open to working with new partners, with Taiwan’s Foxconn seen as one candidate.

Foxconn Chairman Young Liu said on Wednesday it would consider taking a stake in Nissan but that its main aim was cooperation.

Source: AL Jazeera 

BDST: 1542 HRS, FEB 13, 2025
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