Nissan and Honda may team up for affordable EVs that challenge Chinese brands

The aggressive and expansionist plans of Chinese electric vehicle (EV) companies has been a source of worry for automakers across the world. And while Chinese EV brands were previously concentrating on competing in the home market, recent years have seen many take their business to overseas markets as well. It is the start of an even more intense battle on multiple fronts, one that may also require alliances for success.

A recent report in Nikkei Asia highlighted that there may be plans that Japan's Nissan and Honda team up to beat back the strong play of Chinese brands. The focus is likely to be on bringing down manufacturing costs by sharing a common platform while the possible joint venture may see the development of smaller and more affordable battery-powered cars too.

Nissan was early into the EV game with its Leaf model coming out way back in 2009. But it has since been playing on the sidelines with only the Ariya electric SUV having some degree of success. Honda too has been watchful to the point of, some say, dragging its feet. The company has been primarily focusing on hybrids even if there is a realisation that fully-electric models may be where the future of global automotive market is at. But will shaking hands work?

Honda's search for a match made in EV heaven

While Honda is reportedly looking at a joint venture with Nissan, it has wanted to team up to compete in the EV space for quite some time now. In early 2022, the Japanese company officially confirmed that it is in talks with General Motors for a number of affordable EV models that would make use of GM's Ultium battery technology. By 2023, the plans were shelved.

Honda, however, continues to be in partnership with Sony and will offer EVs under Afeela brand that plans to have as many as three offerings by the end of this decade.

File photo: An Afeela electric sedan by Sony Honda Mobility Inc., a joint venture between Sony Group Corp. and Honda Motor Company to produce battery electric vehicles, is shown during CES 2024 at the Las Vegas Convention Center. (Getty Images via AFP)

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File photo: An Afeela electric sedan by Sony Honda Mobility Inc., a joint venture between Sony Group Corp. and Honda Motor Company to produce battery electric vehicles, is shown during CES 2024 at the Las Vegas Convention Center. (Getty Images via AFP)

Beating back Chinese EV companies

The need for partnerships among non-Chinese automotive companies is stemming from multiple factors. Scale is one where many global manufacturers feel they may not be able to offer a plethora of models in a relatively quick enough time to beat back Chinese EV models. Then there is the price war that Chinese brands are waging.

Companies like BYD and NIO, among others, are able to offer their respective EV models at competitive rates, helping them bring in not just Chinese customers to their fold but even buyers in many foreign markets where they have now made their presence known. Even EV giant Tesla is facing the heat and has had to announce a spate of price cuts in key markets. Partnerships tend to allow brands to jointly work on newer platforms that would allow for increased production of mostly smaller and cost-effective models.