Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favorite stories in this weekly newsletter.
A high-level Japanese group, including a former prime minister, has put forward a proposal for Tesla to invest in Nissan, following the breakdown of merger talks with Honda. Led by former Tesla board member Hiro Mizuno, the group is backed by ex-premier Yoshihide Suga and his former aide Hiroto Izumi. The initiative has garnered support from several Nissan board members.
The group is optimistic about Tesla becoming a strategic investor, as they believe the electric vehicle giant is interested in acquiring Nissan’s US plants to enhance domestic manufacturing in response to potential tariff threats from Donald Trump.
Following the collapse of merger discussions with Honda, Nissan faced the risk of falling into foreign hands, with Foxconn, activists, and private equity firms expressing interest. Talks with Honda were initiated after Foxconn approached Renault about acquiring a stake in Nissan. With the breakdown of negotiations, Foxconn confirmed its interest in purchasing Nissan shares to expand its EV manufacturing business.
Former prime minister Yoshihide Suga, who began his political career in Yokohama where Nissan is headquartered, continues to play an active role in Japanese politics. The proposal envisions a consortium of investors with Tesla as the primary backer, possibly including a minority investment by Foxconn to prevent a complete takeover.
As news of the plans circulated, Nissan’s shares surged by 11% in Tokyo. Nissan and Izumi declined to comment on the matter. Mizuno, Suga, Tesla, and Elon Musk have not responded to requests for comments.
Nissan had been exploring partnerships in the tech industry, with board members considering Tesla and Apple as potential targets. The company recently announced an emergency turnaround plan, including job cuts, after reporting a quarterly loss.
With a market capitalization of $1.1 trillion, Tesla is one of the world’s most valuable companies. While historically not investing in car manufacturers, Tesla aims to expand its autonomous driving and robotics capabilities. The company also seeks to increase production in the US to counter potential tariff impacts.
Nissan operates two assembly plants in Tennessee and Mississippi with an annual capacity of about 1 million vehicles. Amid restructuring efforts, the company plans to reduce production capacity globally. Concerns have been raised about the potential sale of US plants to a rival, given the significance of the local market for profits.
Japan’s Ministry of Economy, Trade, and Industry has expressed apprehensions about Foxconn’s interest in Nissan, citing national security implications and the need for a robust screening process. The Japanese government has previously allowed major investments from Taiwan and permitted Renault to acquire a stake in Nissan.
Renault, which still holds a 36% stake in Nissan, is considering selling a significant portion of its shares at a premium. The company’s CEO emphasized the importance of creating value through the partnership and expressed support for Nissan’s management team.
In conclusion, the proposal for Tesla to invest in Nissan marks a significant development in the automotive industry. The potential collaboration could reshape the landscape of electric vehicle manufacturing and strategic partnerships. As the situation continues to evolve, stakeholders will closely monitor the progress of the proposed investment.
