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Last Updated on: 22nd February 2025, 12:12 am
Nissan is floundering. In December, it started cozying up to Honda to see if the two companies could come to some sort of modus vivendi that would help it halt its long decline, an idea that former Nissan CEO Carlos Ghosn called “a desperate proposal.” Nissan has been struggling for some time with an outdated product portfolio and ongoing quarterly losses. It is now proposing to close some of its factories and lay off up to 9,000 employees. After nearly three months of talks, no agreement could be reached and the pair elected to go their separate ways. Foxconn is said to be waiting in the wings and is reported to be interested in getting into the car manufacturing business. However, it appears the Japanese government is none too thrilled about a Taiwanese corporation taking control of one of its major manufacturers. In the meantime, the economic outlook for Nissan is getting darker with every day that passes.
ArsTechnica is reporting this week that senior politicians in Japan are not willing to see Nissan fail. The Japanese government has been trying to find a suitor and had hoped that Honda would do its patriotic duty and save its rival from extinction. The deal fell apart last week after Renault demanded a price premium for its shares in Nissan, and Nissan demanded a merger of equals with Honda, despite the fact that the market capitalization of Honda is five times that of Nissan. In reality, it was always going to be a takeover, with very little in it for Honda in the way of complimentary product lines or access to new technologies.
The Nissan Tesla Rumor
On Friday, February 21, 2025, a rumor surfaced that former Japanese Prime Minister Yoshihide Suga was part of a group that is trying to get Tesla to invest in Nissan. Top Speed says Suga still sits in Japan’s lower house of parliament and some of Nissan’s manufacturing and other facilities are in his district. Such a merger seems highly unlikely, even if Tesla CEO Elon Musk was not completely distracted by his quest to dismantle the federal government and its workforce, Ars said. While the company still maintains a ludicrous market capitalization thanks to retail investors who believe it is poised to sell billions of humanoid robots to every human on earth, as an automaker it may be struggling almost as much as Nissan.
Ars went on to say that several well informed people told it last year Tesla is not a well run enterprise. Like Nissan, its product range suffers from having models that are outdated compared to the competition. It appears that consumers have turned against the brand in Europe and increasingly in the US. In addition, its quarterly financial results have been disappointing recently. Tesla’s free cash flow fell by 18 percent in 2024 to $3.6 billion. Nevertheless, its share price is so high that it could pay for an acquisition of Nissan with equity should it choose to do so.
The Financial Times Started It
According to CBT News, the rumors started with a Financial Times story which said the investment proposal was led by former Tesla board member Hiro Mizuno. In a swift response on X, Mizuno denied the claims, stating that he “has absolutely no involvement” in such a group and expressing doubt that Tesla would be interested in acquiring Nissan’s plants. Elon Musk also dismissed the Financial Times report. Like Mizuno, Musk emphasized that Tesla’s factory design is unique and unlike anything other automakers have. His company’s manufacturing process is a key competitive advantage, he said, and taking over Nissan’s factories would not provide significant value to Tesla. If it did acquire Nissan’s production facilities, it would face the difficult task of retrofitting them to accommodate its specialized manufacturing processes. Doing so would likely prove more costly than simply building new factories from the ground up.
With both Musk and Mizuno refuting the proposal, Nissan now finds itself facing an uncertain future. It’s becoming increasingly clear that the automaker will need a partner to survive in the current market, but it is equally committed to maintaining its independence. That is creating a challenging balancing act. Desperately needing external support while fiercely holding onto its autonomy, Nissan appears to be at a crossroads, CBT News says.
There’s a lot of backtracking going on with these non-merger discussions, Top Speed says, and the background is important. Talks with Honda apparently fell through in part because Honda felt like they were getting a raw deal from Nissan President Makoto Uchida, who didn’t want Nissan to become a subsidiary of Honda. Former Prime Mininster Suga’s office denied knowledge of the merger talks with Tesla, as did former Tesla board member Mizuno. Then Musk quickly rejected the very notion of taking advantage of the Nissan manufacturing facilities in Tennessee and Mississippi. In theory, the upside for Tesla would be avoiding the looming threat of tariffs on all imported goods that are now expected to go into effect in April.
On Friday morning Musk tweeted, “The Tesla factory IS the product. The Cybercab production line is like nothing else in the automotive industry.” The interpretation Top Speed put on that statement by Musk is that conventional transportation is last century’s technology and robotaxis, rather than Pathfinders and Frontiers, are what Americans want next. To be fair, sales of Nissan cars and trucks are down because of the financial turmoil surrounding the company, but how exactly do you pick up a load of mulch or your kids from soccer practice in a nonexistent robotaxi, Top Speed asked? If Tesla isn’t planning on making a more affordable Model 3 or something like that, the company’s already damaged sales are unlikely to see an uptick.
Is Tesla Viable?
What Top Speed is suggesting, without saying so directly, is that despite its lofty share price, Tesla may not be in all that much better financial health than Nissan and could even find itself in a situation similar to Nissan’s if it it not careful. Slapping some new head and tail lights on the Model 3 and Model Y may be welcome news but doesn’t really offset the fact that Tesla has not had a new mass market vehicle in nearly four years. People can disagree about the Cybertruck, but so far as we can tell, its sales alone won’t significantly affect the company’s bottom line. The competition in China is cranking out new models every few months. In comparison, Tesla is well behind the curve and it’s hard to see how a two-seat Cybercab will appeal to buyers who don’t want to be in the taxi business.
The image Top Speed leaves us with is two shipwrecked sailors clinging to each other in an effort to avoid drowning. That is probably too pessimistic, but then again, Tesla seems to think the normal dynamics of the car business honed over 100 years do not apply to it. As Elon continues to piss people off — a weird sales strategy if there ever was one — the fortunes of his company could sour unexpectedly, leaving Tesla searching for a lifeline at some future time the way Nissan is today.
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