Honda and Nissan announce merger to form world’s third-largest automaker

Honda and Nissan, Japan’s second- and third-largest carmakers, have announced plans to merge, aiming to create the world’s third-largest automobile manufacturer by sales. 

The two companies have signed a memorandum of understanding, with the merger expected to be formalised by June 2025 and completed by August 2026. 

This landmark collaboration seeks to strengthen their competitiveness in the rapidly changing automotive market, particularly in electric vehicles (EVs), including hydrogen fuel cell (FCEV) technology.

Fiscal support

The announcement comes shortly after Honda received a strong backing from Japan’s Ministry of Economy, Trade and Industry (METI), which has pledged a subsidy of up to 14.78 billion yen (approximately £100 million) to support the development of advanced hydrogen technologies. 

This aligns with Japan’s ‘Green Transformation’ (GX) initiative, a key component of the country’s strategy to achieve carbon neutrality by 2050.

By combining resources and expertise, Honda and Nissan aim to not only close the gap in EV development but also make significant strides in hydrogen fuel cell technology, an area where Honda is already a leading player.

Honda’s hydrogen ambitions

Honda has outlined an ambitious vision for the future of hydrogen technology, focusing on four key areas for its next-generation fuel cell systems:

• Fuel Cell Electric Vehicles (FCEVs): Expanding the use of hydrogen-powered vehicles beyond passenger cars to include commercial applications.
• Commercial Vehicles: Developing hydrogen-powered trucks and buses as growth markets.
• Stationary Power Systems: Creating hydrogen-based energy solutions for businesses and communities.
• Construction Equipment: Incorporating fuel cell technology into industrial machinery to reduce emissions.

With its advanced fuel cell capabilities, Honda is targeting a 5% share of the hydrogen-powered truck market by 2030, with an ambitious goal of reaching a 30% share by 2040.

Synergies and a shared carbon neutral vision

This merger provides an opportunity for Honda and Nissan to pool their resources, share research and development costs, and achieve economies of scale.

Nissan’s global manufacturing expertise, combined with Honda’s innovations in hydrogen fuel cell systems, is expected to drive substantial progress in clean energy solutions.

Both companies are also focusing on expanding the hydrogen refuelling infrastructure, a key barrier to the widespread adoption of EVs and hydrogen vehicles.

By working together, they aim to reduce costs and enhance the efficiency of deploying hydrogen stations globally.

By aligning with Japan’s GX initiative, the partnership is not only poised to strengthen its market position but also to contribute significantly to global efforts in combating climate change.