The collapse of merger talks between Nissan and Honda has left the struggling Japanese automaker searching for a financial lifeline, and industry sources suggest that Foxconn may be stepping in. The Taiwanese electronics giant, best known for assembling iPhones, has been in talks with Nissan for some time as part of its broader strategy to enter the electric vehicle (EV) industry. Now, with Nissan’s future uncertain, Foxconn’s involvement could be critical in determining the fate of the Japanese automaker.
The potential deal would likely involve Foxconn acquiring all or part of Renault’s 36 percent stake in Nissan, a remnant of the long-standing alliance between the two automakers that was restructured in 2023. Renault has previously indicated interest in selling its 18.7 percent share of Nissan currently held in a French trust. Foxconn Chairman Young Liu confirmed in an interview with the Financial Times that discussions have taken place regarding a potential stake purchase, though he emphasized that the company’s primary focus is on collaboration rather than ownership. “If [taking a stake] is necessary for cooperation, we will consider it, but buying shares is not our main goal. Our main goal is cooperation,” Liu stated.
Nissan’s financial troubles have deepened significantly, with its operating profit plunging 90 percent in the six months leading to September 2024. An unnamed senior Nissan executive reportedly told the Financial Times that the company has only 12 to 14 months to turn things around before reaching a critical breaking point. Following the collapse of the Honda merger talks, Nissan’s stock took a sharp hit, dropping 6.3 percent. The company’s current market capitalization of $10.34 billion is now only a quarter of Honda’s and has decreased by 34 percent compared to last year.
Foxconn, by contrast, is in a much stronger financial position, with a market value more than ten times greater than Nissan’s. The company has been steadily building its presence in the EV sector, aiming to become a contract manufacturer for automakers in the same way it supplies Apple and other tech brands with hardware. Foxconn recently unveiled two new EV reference models—a minivan and a small bus—adding to its growing portfolio, which already includes a pickup truck (Model V) and a sleek crossover (Model B), designed in collaboration with Pininfarina. These designs are intended to be adapted by automakers looking for cost-effective entry points into the EV market.
Foxconn is not entirely new to the automotive industry. Its Model C crossover has already become a top seller for Taiwanese automaker Luxgen, demonstrating that Foxconn’s business model could have real potential in the auto sector. By leveraging its expertise in high-efficiency, low-cost production, Foxconn aims to provide a similar contract manufacturing service to carmakers facing increasing pressure in a competitive, low-margin market.
Apple’s success story offers a glimpse into why Foxconn’s approach could appeal to Nissan. Despite both Ford and Apple maintaining roughly $40 billion in fixed assets and investing between $8 billion and $10 billion annually in capital expenditures, Apple’s revenue in 2023 more than doubled Ford’s, and its net profit was 23 times greater. If Nissan were to integrate Foxconn’s streamlined manufacturing model, it could potentially cut costs and improve efficiency.
However, financial backing alone may not be enough to save Nissan. Industry experts and former Nissan executives argue that the company lacks a clear brand identity and direction, making it vulnerable to market instability and leadership struggles. “I hate to be critical of current management,” said a former high-ranking Nissan insider, “but they’ve done nothing to define what the hell Nissan is and why it deserves to exist.”
As Nissan evaluates its options, Foxconn’s potential partnership presents both opportunities and challenges. On one hand, a collaboration with Foxconn could provide much-needed financial stability, access to cutting-edge manufacturing technology, and a streamlined approach to EV production. On the other hand, Nissan must weigh the implications of becoming increasingly reliant on an outside entity for its survival.
The auto industry is rapidly evolving, and the pressure to electrify is only intensifying. If Nissan does not secure a viable strategy soon, it risks falling behind competitors who are better positioned for the future. Whether Foxconn will ultimately emerge as the solution to Nissan’s financial woes remains to be seen, but one thing is clear: Nissan’s next move will be crucial in shaping its fate for years to come.
