Foxconn third wheel in the merger between Honda and Nissan: talks with Renault

In the increasingly turbulent scenario of the global automotive industry, the negotiations between the now former rivals Nissan and Honda for a possibly imminent merger at the end of the year have been in the spotlight for a few days now. This agreement could represent a historic event, leading to the birth of the third global player by volume, determined to tackle the transition to electric vehicles (Ev), currently dominated by Chinese players. But Foxconn is also attempting to enter the negotiations. The Taiwanese giant weighs in at almost $500 billion in revenues and $76 billion in capitalisation, is a global leader in the production of electrical and electronic components (famous as the assembler of iPhones, but in reality it also produces for Nvidia, Sony, Xiaomi and Amazon, among others, and above all, it already produces electric cars). But it wants to become, quickly, a champion in automotive as well.

Foxconn, in fact, is said to be in talks with the Yokohama manufacturer's largest shareholder, Renault, to ascertain the willingness of the French to sell all or part of their stake in the Japanese manufacturer, Taiwan's Central News Agency (CNA) reported, citing anonymous sources. Foxconn, through its subsidiary Foxtron Vehicle Technologies, aims to grow in the production of electric vehicles (the target would have been 5% of the global market in 2025, but bad bets such as China's Byton and American start-ups Fisker and Lordstown have gotten in the way) and expand its technology supply chain. Last October, the New Taipei City-based group presented Model D, a Lifestyle Multipurpose Utility Vehicle (a hybrid design between an SUV and MPV) designed in collaboration with Pininfarina, and Model U, a medium-sized electric bus. Access to the Japanese market would be another important strategic objective.

Nissan and Honda, two major players in the automotive industry (Honda also for motorbikes), more popular in the US than in Europe (2% and 0.4% share, respectively), have recently entered into a strategic partnership with agreements for synergetic production of Ev for battery technology development. Their ambition is to create a supergroup with annual sales exceeding 8 million vehicles, more competitive in the Ev market (more batteries) and in software for hyper-connected cars. Even Mitsubishi Motors, a minority shareholder in Nissan (1.1 million vehicles), could help consolidate this new coalition from the Rising Sun, which would contrast with the Toyota-Subaru-Suzuki mega-partnership.

It should not be forgotten, however, that Nissan's financial situation is dramatic (according to rumours gathered by the Financial Times, it has little more than a year ahead of it): a flawed strategy on hybrids, by the admission of the CEO Makoto Uchida, an estimated drop in operating profit of 70% and a restructuring plan that includes cutting 9,000 jobs and a fifth of production capacity. It is in this context that Foxconn fits in. In the meantime, the market appreciates, as Nissan has been rallying in recent sessions.

Also according to Taiwan's CNA, Jun Seki, head of strategy for Foxconn's Ev branch, informed the Yokohama-based company of his interest in becoming a shareholder, but Nissan did not respond favourably. Far from resigned, Seki has begun to involve the group led by Luca de Meo. The manager (33 years in Nissan behind him) and his team then flew directly to Paris. Renault's stake in Nissan stems from a long-standing alliance between the French carmaker, Nissan and Mitsubishi. At the end of last year, a shareholding reorganisation was initiated that will take Renault Group from 45% to 15% of Nissan shares, on equal terms, but with a number of collaborative projects. Nissan, for example, pledged to invest EUR 600 million in Ampere, the Renault Group's Ev unit. Renault currently holds 35.7% of Nissan, 18.66% of which is in a trust.