Nissan, Honda in talks to deepen ties amid struggling EV sales

The Japanese automakers on Wednesday confirmed that they are discussing ways to collaborate more closely, but denied claims of an impending merger, according to the Associated Press. Earlier reports cited unnamed sources who said the companies were in talks to combine to create the world's third-largest auto manufacturer in terms of volume, behind Toyota and Volkswagen.

Why are the companies considering collaboration? The Japanese businesses are struggling to compete with their Chinese counterparts, especially when it comes to electric vehicles, Itochu Research Institute Executive Fellow Sanshiro Fukao told Reuters. Nissan and Honda in March announced a feasibility study of a strategic partnership in EV production, and the companies in August said they would discuss sharing EV components with each other and with automaker Mitsubishi.

Is Nissan in trouble? The automaker last month rolled out a $2.6 billion cost savings plan after it reported a significant decline in revenue during the first half of the year. Nissan also said it would cut global production capacity by 20% and slash 9,000 jobs. Executives with the company agreed to accept pay cuts to help the company minimize losses.

Dig deeper: Listen to Mary Muncy’s report on The World and Everything in It about how electric vehicles require mineral mining that is not yet regulated to prevent long-term damage to land.