On February 13, 2025, Honda and Nissan announced the termination of the Memorandum of Understanding (MOU) reached on December 23, 2024 regarding business integration considerations. This marked the final collapse of Honda's merger negotiations with Nissan, and the news attracted widespread attention in the automotive industry. The original plan to launch a new holding company in 2026 to create the world's third-largest automotive group was shattered in just two months due to technical differences and strategic conflicts. Although the failure of this merger has been early on, the results are still embarrassing, which not only reflects the deep differences between the two companies in terms of technology roadmap and market strategy, but also reveals the complexity and challenges of the automotive industry in the transition to electrification. China Exportsemi will try to analyze the reasons behind the incident in more depth.
Technical Dispute: The Battle Between e-Power and e:HEV
At the heart of the breakdown of the negotiations was Honda's demand that Nissan abandon its in-house developed hybrid system, the e-Power, in favor of Honda's e:HEV system. This demand directly touched Nissan's core interests and led to the breakdown of negotiations between the two sides.
1. Nissan's e-Power technology
Nissan's e-Power system has made significant progress since its launch in 2016. According to Nissan's 2022 financial report, the cumulative sales of e-Power models worldwide exceeded 500,000 units, and the main markets include Japan, Southeast Asia and Europe. Nissan plans to launch the third-generation e-Power system in 2025, which is expected to increase thermal efficiency to 45 percent, an increase of 5 percentage points over the current version. In addition, Nissan is developing a plug-in hybrid system based on the e-Power, which it plans to apply to its flagship models such as the X-Trail in 2026.
Technical features:
Tandem hybrid structure: The engine only acts as a generator and does not directly drive the wheels.
Thermal efficiency improvement: The thermal efficiency target of the third-generation system is 45%, which is 5% higher than that of the second-generation.
Market performance: In 2022, the e-Power model reached a 15% market share in Japan, and gradually penetrated the Southeast Asian market.
2. Honda's e:HEV system
Since its launch in 2013, Honda's e:HEV system, i-MMD Hybrid, has sold more than 2 million units worldwide. According to the data disclosed at Honda's 2023 technology conference, the 2.0-liter Atkinson-cycle engine equipped in its latest generation e:HEV system has a thermal efficiency of 41%, and the combined fuel consumption is as low as 4.5L/100km (taking the Accord hybrid as an example). Honda plans to reduce the production cost of hybrid systems by 30% by 2027, mainly by optimizing the motor design and battery supply chain.
Technical features:
Hybrid construction: The engine and motor can drive the wheels in coordination or independently.
Thermal efficiency advantage: The 2.0L engine has a thermal efficiency of 41% and a combined fuel consumption of 4.5L/100km.
Cost control: The company plans to reduce production costs by 30% by 2027.
Pictured: Honda's merger talks with Nissan ultimately fell through
2. Strategic conflict: the divergence between the technical route and the market positioning
In addition to the technical differences, Honda and Nissan also have significant differences in their marketing strategies. Honda hopes to further consolidate its leading position in the hybrid market by integrating Nissan, while Nissan hopes to differentiate itself in the electrification field with its e-Power technology.
1. Honda's strategy
Honda's hybrid technology has already made significant achievements in the global market. In the North American market, for example, sales of the Accord hybrid accounted for 40% of the total sales of the Accord in 2022, an increase of 15 percentage points from 2018. Honda plans to increase the share of hybrid models in global sales to 50% by 2030 and gradually transition to pure electric vehicles.
Strategic Priorities:
Market expansion:North American market accounts for 40% of hybrid vehicles, and plans to increase the number to 50%.
Cost optimization: 30% reduction in production costs by 2027.
Technical route: mainly hybrid, gradually transition to pure electric.
2. Nissan's strategy
Nissan, on the other hand, is focusing more on electrification through e-Power technology. According to Nissan's Nissan Ambition 2030 plan, e-Power models will account for 50% of its global sales by 2030, while all-electric models will account for 40% of its global sales. With the e-Power system, Nissan hopes to achieve a breakthrough in emerging markets such as Southeast Asia, which are less reliant on charging infrastructure and are better suited to promote range-extender hybrid technology.
Strategic Priorities:
Market differentiation: 50% of e-Power models and 40% of all-electric models.
Emerging markets: Focusing on Southeast Asia, sales of e-POWER models increased by 20% in 2022.
Technical route: With e-Power as the core, gradually transition to pure electric vehicles.
3. Market reaction and future outlook
Although negotiations between Honda and Nissan have collapsed on the merger, both companies have indicated that they will continue to cooperate in the field of electrification. This decision shows that despite differences in technology roadmaps and market strategies, the two sides still hope to achieve a win-win situation through cooperation.
Market reaction: The news of the failed integration has sparked widespread concern in the market. Many analysts believe that technical differences and strategic clashes between Honda and Nissan are the main reasons for the breakdown of negotiations. However, the cooperation between the two parties in the field of electrification remains significant, especially in the context of the transition to electrification in the global automotive market.
Future Prospects: Honda and Nissan continue to work together in the field of electrification. The two parties can jointly promote the development of electrification technology through technical exchanges and resource sharing. For example, Honda can learn from Nissan's experience with e-Power technology, and Nissan can also learn from Honda's strengths in cost control and marketing.
IV. Conclusions
The failure of Honda's integration with Nissan reflects the deep divergence between the two companies on their technology roadmap and market strategy. Nevertheless, the cooperation between the two parties in the field of electrification remains significant. In the future, Honda and Nissan will work together to promote the development of electrification technology through technology exchange and resource sharing, and achieve a win-win situation. The incident also reminded other automakers that the choice of technology roadmap and the development of market strategies are crucial in the process of electrification transformation.
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