The Japanese Nissan and Honda announced a new partnership on electric vehicles to contrast the uncontrolled rise of China’s car industry.
Japanese carmakers Nissan and Honda, respectively the country’s second and third-largest, announced a strategic partnership for the production of electric vehicles (EVs). Though the agreement is currently non-binding, both companies agreed in principle to weather its possibilities.
Both companies are heavily shifting to EVs. Nissan was one of the first movers in the EV sector with its Leaf model released in 2010. However, the times were not ripe yet and Nissan temporarily shelved its EV projects.
“It is important to prepare for the increasing pace of transformation in mobility in the mid-to-long-term,” Nissan CEO Makoto Uchida said at the press conference, “and it is significant that we have reached this agreement based on a mutual understanding that Honda and Nissan face common challenges.”
Nikkei Asia reported the two companies could develop an EV train (starting a competition with the Japanese Hitachi) or an EV platform.
The two chief executives stressed the need for speed in their EV efforts. Honda has already laid out plans for full electrification by 2040, meaning that EVs will make up 100% of its sales. Nissan already has an EV partnership with the French Renault.
Markets widely welcomed the partnership, with Nissan and Honda’s stocks increasing by 4.21% and 2.16% respectively today.
A shifting landscape
The Japanese car industry is currently under siege by EV giants like Tesla and Chinese start-ups. In 2023, China became the world’s largest EV producer, overcoming Germany and Japan.
Currently, the world’s largest automaker is from Japan. Toyota, however, has not committed to a full transition, offering mainly hybrid cars, i.e. electric vehicles supported by a fuel engine as well.
At the current pace of car industry changes, experts believe Toyota will focus more on full EVs in the coming years.
Competition from China also means that Japanese brands have less penetration power in the country, the world’s largest car market. Al-Jazeera reported that Nissan’s output in China declined by 24% last year, amounting to almost 1 million vehicles.
Similar hurdles are felt by European carmakers, who also started focusing their attention on more competitive electric cars. Some European companies like Stellantis and Volkswagen opened strategic partnerships with Chinese start-ups, offering production know-how in exchange for technological innovation.
The Chinese government has been dispensing subsidies for EV carmakers for years, which are bearing their fruits only now. As part of a refocusing plan involving the entire national economy, electric vehicles were included among the “new three” products China needs to focus on.
