Japanese Automakers Join Forces to Catch Up in Electric Vehicle Race

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Nissan and Honda have announced a new partnership to jointly develop electric vehicles and software in an effort to catch up to rivals like Tesla and BYD.

The Need for Collaboration

The partnership, which was officially confirmed with the signing of a memorandum of understanding, will see the two Japanese automakers collaborate on the development of software platforms, components for electric vehicles, and other related technologies.

Nissan CEO Makoto Uchida said that the partnership is important in preparing for the accelerating pace of mobility transformation in the medium to long term. He explained that the collaboration with Honda is important as both manufacturers face common challenges. 

Honda CEO Toshihiro Mibe echoed this sentiment, stating that the future will show whether the combination of technology and knowledge will make the two companies leaders in the field of electric vehicle production.

Catching Up to the Competition

The new partnership comes at a time when both Nissan and Honda (and the Japanese automotive industry as a whole) are falling behind electric vehicle leaders like Tesla and BYD of China. According to sources, a key goal of the partnership is to reduce the cost of electric vehicles and increase competitiveness against low-cost Chinese companies. After dominating the domestic market in China, BYD is expanding overseas and has declared war on internal combustion engine cars, reducing the prices of its electric vehicles below $10,000.

Nissan and Honda have already had to drastically cut production in China due to their inability to keep up with Chinese manufacturers. At the same time, the Japanese brands are losing market share in the region, which accounts for 10-20% of their net profit. Thanks to surging electric vehicle sales, China surpassed Japan last year to become the leader in automobile exports.

Source: Investopedia

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