- Shares of Mitsubishi Motors surged on Monday following media reports suggesting the Japanese automaker is in discussions to join a strategic partnership between Nissan and Honda.
- The reported partnership highlights the growing necessity for automakers to collaborate to reduce the substantial costs of developing new technologies.
OUR TAKE
Mitsubishi Motors is set to join the strategic partnership between Nissan and Honda, and the stock market’s response has been absolutely fiery. Mitsubishi’s shares soared by 6.3%, almost rivaling the frenzy after a Tesla product launch. If these three giants truly collaborate on electric vehicles and AI technology, the spectacle will be breathtaking. However, let’s not forget that Tesla and Elon Musk single-handedly shook up the entire industry before. Now, with Japan’s big three joining forces, does this mean the electric vehicle landscape is about to change? Let’s wait and see if this “Eastern Alliance” can bring some new surprises to consumers, and not just excitement in the stock prices.
–Miurio huang, BTW reporter
What happened
Shares of Mitsubishi Motors surged on Monday following media reports suggesting the Japanese automaker is in discussions to join a strategic partnership between Nissan and Honda. This potential collaboration, first hinted at by Nissan and Honda in March, focuses on electric vehicle (EV) components and artificial intelligence (AI) in automotive software platforms, though it does not involve a capital tie-up.
As news of the talks broke, Mitsubishi Motors’ stock climbed 6.3% in early afternoon trading. Nissan’s shares increased by 2.8%, while Honda’s stock saw a 2.6% rise. Representatives for all three companies declined to comment on the reports.
The reported partnership highlights the growing necessity for automakers to collaborate to reduce the substantial costs of developing new technologies. As the automotive industry shifts towards EVs and smarter vehicles, the financial burden of innovation has pushed companies to pool resources and expertise. This trend is evident in the two main alliances forming within the Japanese auto industry.
Toyota Motor leads a coalition with Suzuki, Subaru, and Mazda. Conversely, the potential partnership between Nissan, Honda, and Mitsubishi Motors could reshape the competitive landscape. Mitsubishi Motors, already 34% owned by Nissan and part of a long-standing alliance with Nissan and Renault, would find this new partnership a natural extension of its current collaborations.
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Why it’s important
Analysts at Goldman Sachs emphasise the significance of software development in this potential alliance, suggesting that combining resources could yield significant economies of scale. All three companies stand to benefit from enhanced efficiency and shared technological advancements.
Last year, Nissan, Renault, and Mitsubishi Motors agreed to restructure their existing alliance for a more streamlined partnership. As part of this restructuring, Nissan and Mitsubishi Motors committed substantial investments into Renault’s EV venture, Ampere, with Nissan pledging up to 600 million euros and Mitsubishi Motors committing 200 million euros.
This development reflects the broader trend of consolidation in the automotive sector, where companies seek to mitigate risks and enhance their technological capabilities through strategic partnerships.
