Honda & Nissan Agree To Begin Thinking About Developing Electric Cars Together Someday, Maybe

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What the hell is Honda thinking these days? After a decade of sitting on its thumbs while the EV revolution swirled around it, it decided it had better link up with some other big car company to get back in the game. That led to a partnership with General Motors which would allow Honda to use GM’s Ultium platform and batteries to build electric cars alongside the Cadillac Lyriq at the former Saturn factory in Spring Hill, Tennessee.

The newly released — and heavily promoted — Honda Prologue is the first car to come from that collaboration. An Acura badged sibling is also in the works and that’s it. So far as we know, the vaunted Honda/GM partnership is over. Last fall, Honda CEO Toshihiro Mibe said, “After studying this for a year, we decided that this would be difficult as a business, so at the moment we are ending development of an affordable EV. GM and Honda will search for a solution separately. This project itself has been canceled.” That’s sounds pretty final!

Earlier this year, Honda made waves when it said it would invest a whopping $14 billion to manufacture EV batteries and up to 30 new electric car models in Canada. There have been no significant announcements about the Canadian gambit since.

At the same time, Honda cozied up to Sony in a partnership that will theoretically introduce a new brand electric car brand — Afeela — which will allow drivers to combine the joy of driving with the thrill of playing games on a Play Station. Be still my beating heart!

Honda & Nissan Sign An MOU

As if all this backing and filling wasn’t enough, Honda announced this week that it had signed a memorandum of understanding with archrival Nissan to co-develop electric cars and the electronics associated with them. According to the Associated Press, the details of the agreement — which is non-binding — are still being worked out. The executives said the companies will develop core technologies together, but their products will remain different.

Nissan CEO Makoto Uchida stressed that speed is crucial for the companies in developing technological solutions. “We don’t have time,” he said. “It is significant that we have reached this agreement based on a mutual understanding that Honda and Nissan face common challenges. Emerging players are very aggressive and are making inroads at incredible speed. We cannot win the competition as long as we stick to conventional wisdom and a traditional approach.”

Honda president Toshihiro Mibe added that the two companies share common values and could create “synergies” in facing their formidable rivals. “We are strapped for time and need to be speedy. In 2030, to be in a good position we need a decision now. The rise of emerging players is becoming faster and stronger. Companies that cannot respond to the changes will be wiped out.”

Is This Understanding Sufficient?

The Guardian reports that in late 2019, Japanese government officials tried to convince both companies to enact a full scale merger in order to create a national champion, but the idea was swiftly rejected by the companies. What a loss of face that would be! But now they risk losing everything.

David Bailey, a professor of business economics at the Birmingham business school, told The Guardian, “It’s two Japanese laggards playing catch up. This highlights the threat from China to western car companies, including those in Japan, and the advantages that China has in being able to produce cars at 25% to 30% lower in price. The Chinese government has backed EV exports in a big way and you see more Chinese cars on the road as a result.”

The executives said no mutual capital ownership is involved in the agreement for now, but the companies may look into the possibility down the road. “How we can raise our competitiveness is what we are determined to pursue,” Uchida said.

An Air Of Desperation

Does it seem to you as if there is hint of desperation in air? Nissan was one of the leaders in the market for electric cars when it introduced its battery-electric LEAF in 2009. But it soon got swamped by Tesla, whose cars could travel three times as far on a single battery charge. In addition, Nissan insisted on using passive air cooling for its battery pack instead of the more costly but vastly superior liquid cooling the rest of the industry was using.

The second generation LEAF has updated styling and more range, but still less than competitors like the Chevy Bolt. Nissan introduced the Ariya electric SUV that addressed some of the technological weaknesses of the LEAF, but that car has failed to attract many customers. Raise your hand if you have seen on on the road.

Nissan and Renault have had a messy rupture in their corporate relations, with Renault moving aggressively to chart its own course in the highly competitive European market for electric cars. It recently took the wraps off a new electric version of the Renault 5, a combustion engine car that was one of the best selling cars in France for many years. Having Carlos Ghosn, the head of the so-called Nissan/Renault Alliance, arrested and thrown into prison in Japan soured the relationship between the two companies. Such tactics are guaranteed to create tensions in the boardroom.

The Guardian says that even though electric cars are now an established part of the market, carmakers and suppliers are still racing to develop the next generation of technology, including solid-state batteries that are expected to improve the range of electric cars while making their batteries safer.

The industry is also at the center of geopolitical tensions amid political concerns about over-dependence on raw materials from China. Late last year, Northvolt, Europe’s only large domestic battery manufacturer, said it had made a “breakthrough” sodium ion battery that could eliminate the need for lithium. China controls the majority of battery grade lithium supplies in the world.

The Takeaway

The machinations of Honda as it goes this way and that on electric cars is unsettling. This is a respected company whose products are known for high quality and durability. (My wife and I have owned six of them, including a Civic Si that may have been one of the finest sport sedans ever built.)

We want to see Honda succeed, and yet its on again, off again approach to the EV revolution suggests it hasn’t got a clue. Neither does Nissan. Together these two companies seem like swimmers caught in a riptide clinging desperately to each other as they try not to drown. In the end, they may end up dragging each other down.

What we would like to see is for Honda to stop making splashy announcements and get down to the business of making compelling electric cars. Is that too much to hope for? It sure seems that way.

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