Nissan Shares Surge On Report Of Potential Investment From Tesla

Nissan Motor Co.’s stock surged that a high-level Japanese group is exploring the possibility of securing investment from Tesla Inc. to revitalize the struggling automaker. According to the report, the group believes Tesla could be interested in acquiring some of Nissan’s U.S. manufacturing plants. The plan, which envisions a consortium of investors led by Tesla, might also include a minority investment from Hon Hai Precision Industry Co. to avoid a complete takeover by the Apple supplier.

Following the news, Nissan’s shares spiked by more than 12%, before closing 9.5% higher on the Tokyo Stock Exchange.

The proposed investment comes as Nissan finds itself in desperate need of a lifeline. Earlier this month, a partnership with Honda Motor Co., aimed at merging the two brands under a single holding company, was formally dissolved. With Nissan’s CEO Makoto Uchida acknowledging the difficulty of surviving without a strategic partner, industry observers have expressed skepticism about a potential tie-up with Tesla.

Despite Tesla’s interest in expanding its reach, its own struggles in the electric vehicle (EV) sector may complicate matters. Last month, the EV giant reported its first decline in annual sales in over a decade, while cutting its workforce by more than 10%. A purchase of a stake in another carmaker would mark a significant departure from Tesla’s traditional investments, which typically focus on businesses aligned with its EV technology goals.

The attractiveness of Nissan’s assets remains uncertain. While Nissan operates three plants in the U.S., it has previously indicated plans to slow its ramp-up of EV production at its Canton, Mississippi plant due to potential regulatory changes under former President Donald Trump. Industry analysts, like Yasuhiko Hirakawa, head of investment at Rakuten Investment Management, argue that Tesla may not find value in Nissan’s legacy assets, such as assembly lines and internal combustion engine technology. “It’s difficult to imagine what Nissan could offer that Tesla needs,” Hirakawa stated.

The push for a Tesla-Nissan partnership is reportedly being spearheaded by Hiromichi Mizuno, the former chief investment officer of Japan’s Government Investment Fund, who also served on Tesla’s board from 2020 to 2023. The initiative is said to have support from ex-Prime Minister Yoshihide Suga.

Neither Nissan nor Tesla has commented on the report, and representatives for Mizuno, Hon Hai, and Suga’s office have not responded to requests for clarification.

Elon Musk, Tesla’s CEO, briefly addressed the speculation on social media platform X, commenting on the company’s “Cybercab production line,” without directly acknowledging the Nissan deal.

Nissan’s need for a strategic partner has grown more pressing following its failed deal with Honda. The company has faced a series of setbacks, including weak sales, overcapacity, an aging product lineup, and leadership instability since the high-profile departure of former CEO Carlos Ghosn in 2018. Despite these challenges, Nissan’s extensive manufacturing footprint and brand recognition continue to attract potential investors.

Hon Hai, also known as Foxconn, has expressed renewed interest in Nissan following the collapse of the Honda deal. Additionally, reports suggest that private equity firm KKR & Co. is also considering an investment in the automaker.

However, Nissan’s financial difficulties persist, with Moody’s recently downgrading its credit rating to speculative-grade, reflecting ongoing concerns over the company’s restructuring efforts and the uncertain global economic climate.

Rieko Otsuka, a strategist at MCP Asset Management Japan, noted that regardless of the investor, Nissan’s restructuring remains inevitable.