Mitsubishi Motors Corp. has an agreement already tied with Nissan and now aims at joining a broader strategic deal with the two automobile manufacturers.
Nissan Motor Co. and Honda Motor Co. come together in a collaboration on batteries, software and other technologies related to electric vehicles. The collaboration came into existence to cut costs and create better competition in markets like China where sales are slumping.
In March the Honda-Nissan alliance announced its expansion to include a Japanese automaker – Mitsubishi. A memorandum of understanding has been struck by the three parties to determine how to effectively collaborate on software and electric vehicles.
Takao Kato, Representative Executive Officer, President and CEO, Mitsubishi Motors: “We believe that we can discover new possibilities in a variety of fields through collaboration among the three companies.”
Mitsubishi Motors Corp. has an agreement already tied with Nissan and now aims at joining a broader strategic deal with the two automobile manufacturers. When Honda and Nissan were asked about the talk of a capital alliance, the President of Honda, Toshihiro Mibe said: “We have not discussed a capital alliance as yet, but don’t deny the possibility.”
The aim of the partnership is sharing cost through joint development pits the agreement between the three companies against Toyota Motor Corp. Toyota has formed its own consortium with shares in Subaru Corp., Suzuki Motor Corp., and Mazda Motor Corp. Nissan’s steps to forge a closer relationship with Honda follows its decision in early 2023 to overhaul its alliance with Renault SA, which was dealt a mortal blow by the 2018 arrest of former Chairman Carlos Ghosn.
The Chief Executive Officer of Nissan, Makoto Uchida said in a news conference with Mibe said that although they come from different cultures they share the same challenges. The key point of collaboration will be around software.
The alliance of the three automobile manufacturers is most ideal given the increasing sales of EVs from China. Rather than working alone, which is a lengthy and expensive process, the three companies have come together to accelerate development and achieve economies of scale. Mitsubishi, Honda and Nissan would face a higher and tougher competition as electric cars from China are comparatively cheaper and more diverse.
Mitsubishi, the Japanese automakers have seen a drop in sales in China due to the increased popularity of EVs made by BYD Co. and others. They are taking over the larger part of the market.
Sales of Nissan and Honda fell to about 27% and 40% respectively in June alone in China which was followed by shutting down of few of their plants. Due to which Honda made a decision to cut down the production of gasoline cars by 19% last week while Mitsubishi exited last year.
As batteries and electric motors need large investments and hence the carmakers made a decision to collaborate and come into an agreement in such areas to ensure a return on those resources.
Together in a collaborative effort, Honda, Nissan and Mitsubishi together sold around 4 million units worldwide in their first 6 months through June as compared to 5.2 million units sold by Toyota’s alone.
The strong partnership between Nissan and Honda will give them a way to support their own strengths which includes deploying various powertrain options. It is going to help to offset the enormous cost of navigating the larger trend toward automation.
In 1999 Nissan went into collaboration with Renault where the French carmaker came to its rescue. The automakers have retained interests in each other for years and are now working to equalize their cross-shareholdings. Mitsubishi entered the alliance in 2016 when Nissan invested in the smaller manufacturer, and it now owns roughly one-third of the company.
In Japan, software defined vehicles, or cars built on cutting edge technologies, are a relatively new concept, and Nissan, Honda, and Mitsubishi have lagged behind. By 2030, the Japanese government wants to have a 30% global market share.
