Japanese Auto Giants Join Forces to Counter the Electric Vehicle Surge: Honda, Nissan, and Mitsubishi Form an Alliance

Japanese Auto Giants Join Forces to Counter the Electric Vehicle Surge: Honda, Nissan, and Mitsubishi Form an AllianceAs the electric vehicle wave sweeps across the globe, Japanese automakers are striving to catch up with their overseas rivals. On July 30, sources revealed that Honda, Nissan, and Mitsubishi Motors are in talks to form a strategic partnership

Japanese Auto Giants Join Forces to Counter the Electric Vehicle Surge: Honda, Nissan, and Mitsubishi Form an Alliance

As the electric vehicle wave sweeps across the globe, Japanese automakers are striving to catch up with their overseas rivals. On July 30, sources revealed that Honda, Nissan, and Mitsubishi Motors are in talks to form a strategic partnership. This move is seen as the latest action by the Japanese auto industry to pool resources and fight back in the electric vehicle sector.

The formation of this alliance would significantly reshape the Japanese auto industry landscape. Currently, the industry is divided into two major camps: one comprising Honda, Nissan, and Mitsubishi, with a combined annual sales volume of over 8.33 million units; the other led by Toyota, collaborating with Subaru, Mazda, and others, reaching a total annual sales of around 16 million units.

However, Japanese automakers are facing a formidable challenge as emerging companies begin to dominate the electric vehicle market. Data shows that Tesla and China-based BYD led the global electric vehicle market in 2023 with market shares of 19.3% and 16%, respectively. Meanwhile, smartphone manufacturer Xiaomi has successfully entered the electric vehicle market in just three years, demonstrating its remarkable pace of development.

In contrast, Japanese automakers have lagged behind in the electric vehicle sector. Nissan's market share stands at a mere 3.2%, while Honda's share is a meager 0.2%.

The next generation of vehicles, including electric and autonomous cars, are software-driven and can be enhanced through continuous updates. This shift in business nature necessitates that Japanese automakers abandon their traditional hardware-centric approach and move toward a more flexible software-driven model.

However, independently developing operating systems and electric vehicle batteries requires billions of dollars in investment, posing a significant challenge for Japanese automakers, particularly when they are facing intense competition in their domestic market.

"The internal plans that automakers rely on are now completely useless," stated Honda CEO Toshihiro Mibe. "The market is changing at a pace unlike anything we've seen before," added Nissan CEO Makoto Uchida. Mitsubishi CEO Takao Kato also remarked, "It's natural for us to consider collaborations with various partners."

Faced with such a daunting situation, the three Japanese automakers have decided to join forces and establish a strategic partnership. Their aim is to improve investment efficiency, including utilizing shared software, to reduce research and development costs and collectively address the challenges of the electric vehicle market.

In fact, the three companies have already invested more than double what Tesla has spent on R&D, reaching 1.7 trillion yen (approximately $11 billion). However, not all of this investment has gone toward the electric vehicle sector.

To bolster their competitiveness in the electric vehicle arena, Honda plans to invest 10 trillion yen (around $64.9 billion) in electric cars and their software by fiscal year 2030, establishing a complete supply chain in North America. Meanwhile, Nissan will invest 2 trillion yen (approximately $13 billion) to drive its electrification efforts.

Despite these investments, the combined capital expenditure of the three Japanese automakers still falls short of Tesla's. Tesla's capital expenditures reportedly rose by 24% in 2023, reaching a record $8.9 billion, while the three Japanese automakers' combined capital expenditure amounted to 970 billion yen (equivalent to $6.3 billion at current exchange rates).

To stay ahead in the race, the three companies need to collaborate not only amongst themselves but also establish cross-industry partnerships. This will involve seeking partners in various fields, including semiconductors and charging infrastructure, to collaboratively construct a complete electric vehicle ecosystem.

The International Energy Agency predicts that electric vehicles will account for the vast majority of global new car sales by 2035. In this context, Japanese automakers must act swiftly to seize opportunities, or they risk being left behind by the market.

Will the alliance between Honda, Nissan, and Mitsubishi help Japanese automakers regain their footing in the electric vehicle sector and reclaim market share? Time will tell, but their actions undoubtedly point the way forward for the Japanese auto industry.