5 Reasons Why the Honda and Nissan Merger Could Benefit the EV Market
Written by
Tobi Opeyemi Amure
Edited by
Angela Corry
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It seems like Japanese automakers are fast falling behind the EV movement, with Tesla and Volkswagen taking the lead. However, that could all change by 2025, says CNN, as Honda and Nissan have announced they are merging, and this would become the world’s third-largest automaker.
Beyond rumors of how Honda supposedly saved Nissan from bankruptcy, this could set the stage for a major electric vehicle market impact.
How could this merger possibly accelerate innovation and create a new competitive landscape? Here are five compelling reasons why this merger could be a game-changer for the EV market.
Accelerated EV Innovation and Development
With the joint expertise of two of the world’s largest automobile manufacturers, it is possible that EV technology can progress very quickly. Lauren Fix, founder of Car Coach Reports, suggests that the shared platform and technology will be beneficial to Honda and Nissan.
She explained, “This collaboration could enhance both companies’ EV offerings. Currently, Nissan produces the electric Leaf and Ariya models. By partnering with Honda, Nissan could gain access to the Ultium platform, which Honda developed in collaboration with General Motors. This could potentially reduce costs for Nissan and allow them to incorporate Honda’s interface technology, which uses Google’s systems, into their vehicles.”
In addition, this collaboration could lead to a new breed of EVs featuring Nissan’s battery knowledge and Honda’s know-how about powertrain efficiency. We could also see cars with advanced technologies like wireless charging systems, better self-driving features and improved vehicle-to-grid integration.
Enhanced Research and Development Capabilities
According to figures from Nissan and Honda, in 2024, the combination will invest around $10.8 billion in R&D annually. Compared with Tesla ($9.1 billion) and Volkswagen ($8.9 billion), the Japanese combo is spending the same on R&D. As such, Honda and Nissan could invest in research and development for battery production, charging infrastructure, and extended EV range.
There are many possibilities as to what they can achieve with a combined R&D budget. The companies could look to speed the development of solid-state batteries, a technology they have been pursuing independently.
David Loo, Operations Manager at Xpro Auto Glass, says, “Using resources in multiple ways is crucial. Nissan’s better solid-state battery technology and Honda’s efficient drivetrain technologies could generate EVs that go over 500 miles on a charge.”
Expanded Product Portfolio
Merging of the two companies could deliver a greater spread of EVs to the market in more diverse forms. Experts have their thesis as to what’s to come with this merger. Fix suggests that a potential Honda-Nissan merger could significantly expand Honda’s truck and SUV lineup. She says Honda sells one truck, the Ridgeline, which is not a truck. On the other hand, Nissan makes the Armada, Frontier and Titan.
“With the chassis from Nissan trucks, Honda could expand their line with full-sized SUVs and pickup trucks.”
According to Honda, the merger aims to accelerate the mutual complementation of Honda and Nissan’s global vehicle offerings, including EV models. It will allow the companies to be better responsive to both global requirements and customer needs and to put in place the optimal products.
As Loo notes, “This collaboration will lead to better cars and could create new categories of sustainable transportation, combining innovation with accessibility.”
Increased Competition
The joining of Honda and Nissan is expected to boost competition in the electric car space and create more innovation and cheaper cars across the industry. This is particularly important as Chinese manufacturers like BYD continue to expand globally. In 2024, BYD overtook both Honda and Nissan to become the world’s seventh-largest automaker by number of cars sold in the April-June quarter.
The Honda and Nissan merger would encourage other manufacturers to further research and development. We can expect to see rapid advancement in EV technology with vehicles that have better batteries, longer driving ranges and more efficient charging systems. Consumers could benefit from a wider array of affordable and technologically advanced electric vehicles, potentially accelerating the global transition to sustainable transportation and helping to achieve climate goals more quickly.
Economies of Scale and Cost Reduction
The Honda and Nissan merger can help cut costs and staff effectiveness, which may flip the electric car marketplace. The vehicle platforms can get beneficial scale benefits if they are the same across different segmentation products. Because vehicle and operational volumes are higher they would like to get lower development costs for each vehicle. The result of which is that electric vehicles will become more affordable for more people to purchase.
The merger would cut costs by lowering the number of systems and back office jobs. To build more talent, they could enhance employee exchanges and technical collaboration, incorporating such innovation in intelligence and electrification.
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