Japan Seeks Tesla’s Investment in Struggling Nissan

A high-level Japanese group, including former Prime Minister Yoshihide Suga, is attempting to court Tesla as a strategic investor in Nissan, following the collapse of its merger talks with Honda. The initiative, led by former Tesla board member Hiro Mizuno and Suga’s former aide Hiroto Izumi, aims to secure Tesla’s backing to strengthen Nissan’s position in the global electric vehicle market.

Nissan’s Search for a Strategic Partner

Several Nissan board members are reportedly aware of the proposal, which envisions Tesla acquiring Nissan’s U.S. manufacturing plants. This would help Tesla expand its domestic production capabilities in response to potential tariffs under former U.S. President Donald Trump.

The move follows Nissan’s rejection of a $58 billion merger proposal from Honda, raising concerns that Japan’s third-largest automaker could be vulnerable to foreign takeovers. Taiwanese electronics giant Foxconn, private equity firms, and activist investors have all shown interest in Nissan’s future.

The Role of Foxconn and Renault

The idea of a Nissan-Honda merger initially stemmed from Foxconn’s approach to Renault last year, seeking to acquire part of its stake in Nissan. After negotiations collapsed, Foxconn reaffirmed its interest in purchasing Nissan shares to expand its presence in the electric vehicle sector.

Suga, though no longer prime minister, remains influential in Japanese politics and has a deep connection to Nissan’s home city, Yokohama. The proposal under discussion includes a potential minority investment from Foxconn to prevent a full takeover by the Apple supplier.

Nissan’s Stock Surge and Tesla’s Response

Following the Financial Times report on these discussions, Nissan’s stock surged as much as 11.5% in Tokyo before closing up 9.5%.

However, Elon Musk appeared to downplay any interest in the deal. Responding to a post on X, his social media platform, Musk wrote:
“The Tesla factory IS the product. The Cybercab production line is like nothing else in the automotive industry.”

While Nissan and Izumi declined to comment, Suga’s spokesperson denied his direct involvement in compiling the proposal. Meanwhile, Nissan has independently been exploring partnerships with major tech firms like Tesla and Apple, as it seeks to recover from financial struggles.

Nissan’s Financial Woes and Turnaround Efforts

In November, Nissan announced an emergency restructuring plan, including 9,000 job cuts, after reporting a quarterly loss. On Friday, Moody’s downgraded Nissan’s credit rating to junk status, citing risks related to its turnaround plan, an outdated product lineup, and global trade uncertainties.

With a market capitalization of $1.1 trillion, Tesla has historically avoided investing in traditional car manufacturers. Instead, Musk is prioritizing Tesla’s focus on autonomous driving and robotics, allocating its $36 billion in cash reserves accordingly.

However, Tesla is also aiming to boost U.S. production to counter potential trade tariffs. While Nissan operates two assembly plants in Tennessee and Mississippi with a combined annual capacity of 1 million vehicles, only 525,000 units were produced there in 2024. Nissan has already announced plans to cut global production capacity by 20% due to declining sales.

Japan’s Government Concerns and Renault’s Future Plans

The Japanese government is reportedly concerned about Foxconn’s growing interest in Nissan, given its perceived ties to China. Officials at Japan’s Ministry of Economy, Trade, and Industry have debated the national security implications of allowing Foxconn to acquire a stake in Nissan.

Meanwhile, Renault, which still holds a 36% stake in Nissan, is looking to sell a significant portion at a high premium. Renault’s CEO, Luca de Meo, emphasized that any proposal must reflect the value created through their 25-year partnership, stating:
“I just hope that the Nissan management team finds a way to make it work better than it has worked so far.”

As discussions continue, Nissan’s next move will be crucial in determining its future amid increasing competition and financial pressures.