Summary of the News Core Content
This report discusses how two Japanese automakers, Honda and Nissan, which once dominated the global automotive industry with their fuel-powered vehicles, have fallen far behind Chinese competitors in the transition to new energy technologies. Previously, they attempted a full merger in 2025 but failed (Honda wanted to acquire Nissan as a wholly-owned subsidiary, which was rejected). Now, they have reached a substantive technical cooperation agreement: the two companies will jointly fund the development of the core software, in-vehicle systems, and supporting electronic architectures for the next generation of smart vehicles, with plans to deploy these technologies in their new models only by 2029. Essentially, these two companies, which together incur annual losses of over 40 billion yuan, are joining forces to reduce research and development costs. However, given the current pace of industry innovation and the comprehensive gap between China and Japan in the new energy sector, this partnership will at best help the Japanese automakers catch up slightly, but they are unlikely to catch up with the speed of Chinese automakers.
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Detailed Explanation of the News
1. From Competing to Collaborating: The Background of the Cooperation
Many people think this collaboration came about spontaneously, but in fact, the two companies have been in discussion for nearly three years. Initially, they planned to merge completely by the end of 2024, combining their resources into one entity. However, after two months of negotiations, the deal fell through—Honda, relying on its better financial situation at the time, proposed to make Nissan a wholly-owned subsidiary, which Nissan refused. Nevertheless, they had already made significant investments in software development projects over the past six months. Since breaking off the deal would have resulted in significant losses, they decided to modify their approach: instead of a capital merger, they will collaborate on specific projects, each contributing personnel and funds to develop the core software for smart vehicles. The resulting software will be freely accessible to both companies, saving them the cost of developing their own systems separately.
2. The Main Motive for Cooperation: Cost Savings
The primary reason for this partnership is financial distress. In the 2025 fiscal year, Honda lost 18.2 billion yuan, and Nissan lost 23 billion yuan, totaling over 40 billion yuan in losses. Software development now accounts for 40% of the total research and development costs for vehicles. If the two companies continued to develop their own systems independently, their already strained cash flows would be overwhelmed. Japanese media estimates that by collaborating, they can reduce their software development costs by 30%. For example, if each company previously spent 10 billion yuan on software development, they would now only need to spend 7 billion yuan each, saving a significant amount of money that can be used to offset their losses.
3. The Slow Pace of Innovation (2029 Deployment)
The timeline of 2029 for deploying the new systems seems extremely slow compared to the current pace in the smart vehicle industry. Chinese automakers can develop and launch new models or upgrade their smart platforms every 18 to 24 months. By 2029, when Honda and Nissan’s new systems are finally available, Chinese leaders in the industry may have already upgraded their platforms twice. To put it simply, while Chinese automakers have the latest smartphones and are constantly updating their systems and adding new features, Honda and Nissan are still in the early stages of developing their own software, which means they could be behind by the time their systems are deployed.
4. The Fundamental Gap
The reason the Japanese automakers cannot catch up with Chinese competitors is not a lack of technical capability; rather, it stems from fundamental differences in their approaches and underlying foundations. For decades, Japanese automakers have focused on hybrid and hydrogen fuel technologies, dismissing pure electric vehicles as a wrong direction. As a result, their transition to new energy has been slow. Japan’s penetration of pure electric vehicles is very low, with only 1.4% of new vehicles being electric. This lack of user feedback has hindered product innovation. Additionally, China has the most complete industrial chain for new energy vehicles, with a surplus of engineers in all relevant fields. The Japanese automotive industry even acknowledges a shortage of engineers capable of developing smart vehicle software.
5. The Impact of the Cooperation
This partnership will not pose a threat to Chinese automakers; at best, it will provide a temporary boost to the Japanese companies. The gap between China and Japan in new energy vehicles is not just about a single technology but a comprehensive one. China’s massive market, fierce industry competition, and rapid product iteration have left Japanese automakers far behind. Even if Honda and Nissan collaborate, they will not be able to make up for their shortcomings in terms of philosophy, talent, and market ecosystem. Unless they seek cooperation with Chinese technology companies, they will likely still rely on Chinese teams to modify their products to compete in the Chinese market by 2029.