Honda and Nissan plan to merge as we enter the age of electric cars

Honda and Nissan have announced plans to merge as the Japanese automakers struggle with competition from rival brands in the electric vehicle market. The two companies confirmed on Monday that they had signed a memorandum of understanding that would create the third largest car maker by sales, behind Toyota and Volkswagen.

Nissan alliance member Mitsubishi Motors is also in talks with Honda and Nissan to join the integration, with a decision expected by the end of January. Based on the market capital of all three companies, a finalized merger could result in an entity worth more than 50 billion dollars. Honda will initially lead the management of the merged company according to Honda president, Toshihiro Mibe, with the aim to complete a formal merger agreement by June and finalize the deal by August 2026.

“Creation of new mobility value by bringing together the resources including knowledge, talents, and technologies that Honda and Nissan have been developing over the long years is essential to overcome challenging environmental shifts that the auto industry is facing,” Mibe said in a statement.

The proposed merger was initially teased last week, and aims to establish a joint holding company to tackle growing global competition from brands like Tesla and China’s BYD in the EV market. The deal would also help to rescue the struggling Nissan, which saw its net earnings in mid-2024 fall by more than 90 percent year over year, and announced plans in November to lay off thousands of workers.

“If realized, I believe that by uniting the strengths of both companies, we can deliver unparalleled value to customers worldwide who appreciate our respective brands,” said Nissan CEO Makoto Uchida. “Together, we can create a unique way for them to enjoy cars that neither company could achieve alone.”

Ex-Nissan boss Carlos Ghosn told Bloomberg on Friday that the merger is a “desperate move” by Nissan, and that it’s “not a pragmatic deal because frankly, the synergies between the two companies are difficult to find.” The company has been in turmoil since Ghosn was arrested by Japanese authorities in 2018 over charges of financial misconduct.