The Global Nissan-Honda Merger Failed. But A U.S. Partnership Is Very Much Alive

The merger between Nissan and Honda would have created the world’s fourth-largest automaker. But merger talks collapsed this year due to major differences in their desired terms. Honda wanted Nissan to become a subsidiary, but that would have hurt Nissan’s “pride.” 

There were other questions about how their vast global production apparatus and R&D facilities would fit together. But the talks are now back on the table, this time with the expectations diluted, and a core focus on the U.S. market.

Welcome to the Friday edition of Critical Materials, your daily round-up of news shaping the world of electric cars and technology. 

Also on my radar today: The Volkswagen Group wanted to make Audis in the U.S. in response to the Trump administration’s tariffs, but that may not happen now. Plus, the race to produce raw lithium production in the U.S. is gaining momentum.

30%: Nissan And Honda Could Team Up In The U.S.

Photo by: InsideEVs

The Nissan-Honda merger may be dead, but a more manageable U.S.-focused collaboration is still possible.

North America is by far the largest market for both brands in terms of sales volume. They also both have sprawling factories in the U.S. Nissan makes several popular models, including the Altima, Pathfinder and Rogue, at its Canton, Mississippi, plant. Honda’s U.S. footprint is even bigger, with factories spread across Ohio, Alabama and Indiana. The CR-V, Accord and select Civic variants are all made in America, too.

But the Trump administration’s tariffs, as well as the capital-intensive path to electrification and looming competition from China, are negatively impacting their profits and sales. They now think helping each other out in their most important and lucrative market could be mutually beneficial.

Here’s more from Nikkei:

“We are talking about how we can collaborate in the U.S. Is there any opportunity for joint product development or for powertrain development? These are the topics that we are discussing,” Nissan President and CEO Ivan Espinosa said in an interview held at the automaker’s headquarters in Yokohama, Japan.

The two companies signed a memorandum of understanding in August 2024 to conduct joint research on software-defined vehicles, batteries and electric motors. That partnership could now deepen, and it may not be limited to battery-powered cars. 

The report continued:

Amid the slowing pace of electric vehicle adoption and the surging presence of Chinese EV makers, such as BYD, “We see that there will be space for ICE (internal combustion engine), hybrids and EVs,” Espinosa said.

Automakers have been squawking this paean for months now, suggesting they’re not giving up on gas cars and hybrids just yet as EV sales cool down in this part of the world. 

Nissan could benefit from Honda’s expertise with hybrids, which are lacking in its line-up, missing out on an increasingly popular category. And Nissan has what Honda doesn’t, not yet at least: An excellent, affordable EV, the new generation Leaf. 

Espinosa added that the spirit of discussions with Honda continues to be “very constructive” and the number of joint projects in the pipeline is “probably at its peak.” Let your thoughts run wild with that until we know what that actually means further down the road.

60%: Audi Wanted To Build Cars In The U.S. That May Not Happen

Photo by: Audi

Audi’s gas car sales in the U.S. are declining, but its EVs are a massive hit. The Q6 e-tron, Q4 e-tron and the new A6 e-tron all have crushed it so far this year. But they’re all in Germany and prone to the Trump administration’s tariffs (Currently at 15%).

To tackle the tariffs, the Volkswagen Group was planning to localize production. But German newspaper Bild reported Thursday that those plans are now “difficult to realize due to a lack of capital,” citing sources within the company.

The Volkswagen Group has postponed its broader investment package, the report said, which could impact plans for new models and expenditures for around 100 plants across the globe. Tariffs alone are causing the company to lose millions on a weekly basis, worsened by struggles in the Chinese market due to strong local competition. 

90%: The U.S. Government’s Quiet Lithium Production Push

Lithium Mining Processes

The U.S. government is supporting Canadian lithium extraction company Standard Lithium with millions of dollars in Department of Energy (DOE) grants and fast-tracked federal permits, Reuters reported on Friday. 

Right now, the vast majority of global lithium mining happens in South America, whereas China dominates processing and refining. But companies in North America are trying to develop their own production capabilities to reduce their reliance on China. 

Lithium is used in batteries that power virtually everything from electric cars to electronics gadgets and your household appliances. The support for a clean energy project such as this is rare, as the Trump administration has so far mostly gutted pro-climate policies.

100%: What Would You Like From A Nissan-Honda U.S. Collab?

Photo by: Mack Hogan/InsideEVs

Honda’s hybrids are among the nicest in the world. And Nissan knows a thing or two about making affordable EVs with great personality. Should Honda and Nissan share their hybrid platforms and EV expertise to boost their U.S. business? Do you think a Nissan hybrid crossover with CR-V underpinnings would make sense? Or an affordable Honda with the Leaf’s CMF-EV skateboard architecture? Leave your thoughts in the comments. 

Have a tip? Contact the author: suvrat.kothari@insideevs.com