Honda and Nissan reportedly open merger talks

Honda and Nissan are reportedly set to discuss a merger. The Japanese publication Nikkei said the two automakers plan to sign a memorandum of understanding to sort out shared equity stakes in a new holding company for the consolidated rivals.

The potential merger would combine the assets of Japan’s second- and third-biggest automakers, giving them a better shot of competing with the nation’s market leader, Toyota. Bloomberg adds that it would also put them in a better position against Tesla and Chinese EV makers. Nikkei says Mitsubishi could join the talks later.

Earlier this year, Honda and Nissan said they would work together on software development, batteries and other EV components. That “combine-and-compete” alliance followed Toyota’s acquisition of stakes in Subaru, Suzuki and Mazda. With today’s news that the pair are ready to take the next step, the landscape is clearly heading toward fewer (but bigger) legacy automakers competing for customers.

Bloomberg also reported on Tuesday that Honda is stepping up production of hybrid vehicles as demand for electric / gas vehicles remains high outside of China. The automaker is aiming to double its annual hybrid sales by 2030. “The goal is still to become carbon neutral by 2050, but demand for hybrids will remain high for the foreseeable future,” Honda Chief Officer Katsuto Hayashi said on Sunday. “We see most of that growth happening in North America.”

Speaking of North America, US President-elect Donald Trump reportedly plans to reverse President Biden’s EV policies. His transition team is said to have recommended ending government support for EVs and charging stations and focusing instead on blocking cars, components and battery materials sourced from China. Climate scientists have warned that transitioning from gas-powered to electric vehicles is necessary to reduce carbon emissions and head off the most catastrophic projections for our planet.

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