Japan's Auto Rally Betrays Global EV Anxiety

Japan's latest stock rally underscores the global anxiety over automakers' transition to smarter, cleaner cars.

Though Nissan and Honda announced they were looking into a strategic partnership back in March, little is known about the content of their talks. I Photo: Nissan

Investors on Monday were quick to react to the news that Mitsubishi Motors will join an alliance between Honda Motor and Nissan Motor, which the Nikkei had reported,

Katrina Hamlin wrote in Reuters Breakingviews that the $4 billion carmaker's shares rose some 5% following the report, while its larger peers each gained more than 2%, adding nearly $2 billion to their combined market valuation.

Details about how exactly the trio would work together are scant.

Though Nissan and Honda announced they were looking into a strategic partnership back in March, little is known about the content of their talks, except that they were wide-ranging, covering automotive software platforms, core components related to electric cars, and the even vaguer category “complementary products.”

Even so, there is reason to be excited. Combined sales of the three manufacturers totaled nearly 8 million units last year.

That indicates scope for significant economies of scale in the research, development, and sourcing of key technology, which could be especially lucrative for costly components like batteries.

By comparison, the world’s largest group by sales, compatriot Toyota Motor, delivered just over 11 million vehicles in the 12 months to the end of March. Operating margins at the $250 billion giant hit 11% in its most recent financial year, per LSEG, trouncing roughly 7% at Honda and Mitsubishi and 4.5% at Nissan.