Japan’s carmakers are embarking on a new strategy to navigate the automotive industry’s shift towards electric vehicles (EVs) and software. Honda, Nissan, and Mitsubishi have joined forces to collaborate on various aspects, including software development, battery technology, EV charging, and energy services. While a capital alliance has not been confirmed, the partnership signifies a coordinated effort by Japan’s government to strengthen the country’s auto industry amid China’s rise as a global car exporter.
Compared to Toyota, which has already formed partnerships with Subaru, Suzuki, and Mazda, Honda, Nissan, and Mitsubishi are smaller players on the global stage. By working together, these companies aim to generate synergies and overcome the challenges they face individually. James Hong, an analyst at Macquarie Securities Korea Ltd., suggests that this alliance may be politically driven, as most Japanese automakers lack the resources to invest in EVs on their own.
Japan is home to numerous car manufacturers that produce vehicles worldwide, unlike the US and Germany, which have dominant trios of automakers. The combined sales of Honda, Nissan, and Mitsubishi in the first half of 2021 were significantly lower than Toyota’s sales alone. However, the companies believe that their collaboration can lead to mutual benefits and help them catch up in the software-defined vehicle market, which is crucial in today’s automotive landscape.
Aside from software development, the partnership may involve sharing battery specifications and supply, as well as re-badging each other’s vehicles. Honda and Nissan have not provided specific details about models or regional complementarity. Honda has committed to investing ¥10 trillion in electrification this decade, while Nissan brings expertise in fully electric vehicles, such as the groundbreaking Nissan Leaf. Mitsubishi Motors excels in plug-in hybrid electric vehicles and has a strong market presence in Southeast Asia.
The rising popularity of EVs in China has impacted all Japanese automakers, causing them to lose market share. Last year, Mitsubishi Motors withdrew from the Chinese market, and Honda and Nissan experienced significant sales declines. The partnership between Honda, Nissan, and Mitsubishi is seen as a strategic move to combat this trend and regain their foothold in China’s EV market.
For Nissan, the collaboration with Honda also signifies a shift in focus away from its alliance with Renault. Although Renault helped Nissan overcome financial challenges in the past, their relationship has become strained, especially after the arrest of former Chairman Carlos Ghosn. Mitsubishi’s inclusion in the alliance further strengthens the partnership, as Nissan already owns a substantial stake in the company.
Analysts believe that the Honda-Nissan-Mitsubishi alliance will be more equitable compared to Nissan’s previous alliance with Renault. The companies can leverage each other’s strengths and make collective decisions, unlike the situation with Renault, where Nissan felt overshadowed. Honda’s previous collaboration with General Motors on EVs was discontinued, making the partnership with Nissan and Mitsubishi a logical choice.
As the automotive industry transitions towards EVs and software-defined vehicles, collaborations like the one between Honda, Nissan, and Mitsubishi become necessary for companies to stay competitive. By combining their resources and expertise, these Japanese automakers aim to strengthen their market position, overcome shared challenges, and capitalize on the growing demand for electric and software-driven cars.