AD #3958 – Merger Shock: Honda & Nissan To Tie the Knot; CATL Goes All-In on Battery Swapping; Porsche To Delay EV Models

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

MERGER SHOCK: HONDA & NISSAN TO TIE THE KNOT
In a sign of the seismic shift that’s disrupting the auto industry, Honda and Nissan are considering merging together, or at least creating some form of a holding company. Nissan, as we’ve been reporting here, is in deep trouble. Its sales have plummeted in China and are down sharply in the U.S. market. In the last quarter, its net profit margin was only 0.3%. Even though Honda has seen its sales drop in China too, on an overall basis the company is in decent shape. Earlier this year the two companies announced they would collaborate to develop electric cars and software. But as Nissan’s situation broke down, somebody made a decision that it should really merge with Honda. We think that decision was likely made by MITI, Japan’s Ministry of International Trade and Industry, which is trying to protect its auto industry as Chinese automakers elbow Japanese automakers aside in markets like Southeast Asia and Latin America. The Japanese auto industry is in danger of losing millions of vehicles in sales.

FOXCONN ALSO INTERESTED IN NISSAN
Another thing that probably triggered this merger talk is that Foxconn, the Taiwanese contract manufacturer, said it was interested in buying Nissan. Foxconn has wanted to get into the electric car business for years and even developed its own EV platform, software stack and showed off 6 EV concept cars. But it’s unlikely that MITI would want a Taiwanese contract manufacturer to buy one of the crown jewels of the Japanese auto industry, and that’s probably part of the reason we’re suddenly hearing about a merger between Honda and Nissan.

RENAULT APPROVES HONDA-NISSAN “ON PRINCIPLE”
By the way, Renault, which owns 15% of Nissan, says that on principle it’s in favor of the merger. But of course, it would say that, because if Nissan goes down the drain, Renault’s stock holdings in Nissan would be worthless. But saying it’s in favor “on principle” is not exactly a ringing endorsement. And no doubt Renault will want to stick its nose into any negotiations between Nissan and Honda.

CATL GOES ALL-IN ON BATTERY SWAPPING
Swapping out batteries for EVs is a quick way to solve range anxiety and worries about charging time. NIO was the first automaker to pursue swapping in a serious way, and it has partnered with Changan, Geely, JAC, Chery and more to set standards and develop a network of stations. Well, now CATL, the world’s largest battery company, unveiled two standardized battery packs designed for swapping and says it wants to build 30,000 swapping stations in China. The batteries are officially designated Choco-SEB. Choco refers to chocolate, because the battery cases have a chocolate color to them. SEB stands for swapping electric blocks. There are both NMC and LFP versions that range in size from 42 kilowatt hours to 70 kWh. And you lease them for anywhere from $50 to $82 a month. The idea is you lease the smaller ones for everyday commuting, then get a bigger one for longer trips. But even though we refer to these as bigger and smaller, the actual units themselves are the same size. CATL says that next year 10 EV models from GAC, BAIC, Wuling and FAW will use battery swapping. So far these are for small and mid-size cars, specifically AO, A and B-class. But CATL predicts that by 2030, one-third of EVs in China will use swapping. 

 

HONDA LAUNCHES NEW HYBRID SYSTEM
Going back to that possible Honda-Nissan merger, Honda has a lot of one thing Nissan needs more of, especially in the U.S., hybrids. And Honda is about to launch a whole new generation of electrified vehicles. That includes a new mid-size platform, which is more rigid, about 90 kilograms or roughly 200 pounds lighter and has 60% common parts between models, like the engine bay and rear floor. Those models get the newest version of Honda’s 2-motor hybrid system that can drive on battery power only, a mode where the engine generates electricity for the battery, which powers the motor or the engine can drive the front wheels directly. That sounds a lot like the drive modes of the original Chevy Volt, but Honda hasn’t detailed in what situations the engine will power the wheels directly in its new system. However, it did reveal all-new 1.5L and 2.0L engines that will help improve fuel economy by about 10% compared to its first-gen 2-motor hybrid. To get the most out of those engines, it’s introducing a new Honda S+ Shift function that will be featured on all future models that use its new hybrid system, starting with the new Prelude that goes on sale next year. It says the function controls engine RPM during acceleration and deceleration for more direct response and sharper gear shifting. Some models will also be available with AWD thanks to a rear drive unit, which is completely electric and has no mechanical connection to the engine. 

HONDA LIKELY ENDING GM FUEL CELL PARTNERSHIP
Speaking of Honda, it looks like it’s dropping GM as a fuel cell development partner. Honda says it will independently develop its next-gen fuel cell system and is converting an existing powertrain plant in Japan to make it. Production is expected to start in 2028 and Honda hopes to make about 30,000 units a year. The Japanese government will also provide up to $95 million in subsidies for the project.

TOYOTA GETS JAPAN SUPPORT FOR FUEL CELLS
Toyota will get some government support for fuel cells as well. It received an application to help establish a domestic supply chain in Japan for fuel cells and water electrolysis systems. Toyota especially sees a market for commercial vehicles, including in Europe and North America, where it expects to supply 75,000 units by the end of the decade. 

U.S. GRAPHITE MAKERS WANT 920% CHINA TARIFFS
U.S. producers of graphite, a key material in EV batteries, want huge tariffs on Chinese graphite– we’re talking up to 920%. They accuse the Chinese of benefitting from massive state subsidies that allow them to artificially lower the price. As of last year, China controlled 92% of the global market for graphite used in batteries. And of the 92,000 tons of graphite that were imported into the U.S. last year, 70,000 tons came from China. However, those tariffs would double the cost of making a battery cell. 

PORSCHE TO DELAY EV MODELS
Another brand under the Volkswagen umbrella wants to scale back its EV plans. Earlier this week, Lamborghini said it’s delaying the launch of its first EV to 2029, a year later than planned. And now Porsche is looking into revising its EV plan. Originally, they were to account for 80% of sales by 2030. It’s considering delaying the all-electric Cayenne, which was supposed to launch in 2026, and will extend the life of the ICE version. A large electric-only SUV positioned above the Cayenne planned for 2027 could now also offer a combustion powertrain. And its running into issues electrifying the Boxster and Cayman because of battery issues.

TESLA CLASHES WITH GERMAN UNION
Tesla is clashing with German union IG Metall. The automaker is accusing the union of trying to oust the head of the works council at its Berlin factory. IG Metall filed a motion with a local court to remove the leader, who is not a member of the union, from the council. The union claims working conditions at the plant are sub-par and it also accuses Tesla of trying to restrict it, which would violate German labor law. But Tesla denies those accusations.

TESLA’S CHINA PLANT MANAGER LEAVES COMPANY
And in other Tesla production news, the plant manager at its Shanghai plant has left the company and no reason was given for his departure. He also spent time in the U.S. to help with production issues at Tesla’s plants in California and Texas in 2022 and previously worked at GM and Ford in China before joining Tesla in 2018.

And a quick reminder with Christmas and New Year’s coming up, this is our last week of shows before 2025. But that’s a wrap for today. Thanks for tuning in.