Last week, the spotlight was on a potential game-changing development. Honda HMC and Nissan NSANY are exploring a $50 billion merger. This bold move aims to address the escalating challenges of the electric vehicle (EV) era, streamline costs and strengthen the companies’ position against global EV leaders like Tesla and BYD. If finalized, the merger could not only reshape the future of Japan's auto industry but also redefine the competitive dynamics of the global automotive market.
Meanwhile, U.S. legacy automaker General Motors GM and Lithium Americas announced the closure of their joint venture deal on the Thacker Pass project in Humboldt County, NV. This site is among the largest lithium reserves in the United States and ranks among the top five globally.
China’s electric vehicle maker NIO Inc. NIO revealed its first model from its third brand, Firefly, which is set to debut in China in April. Finally, California Air Resources Board (CARB) fined the Italian-American automaker Stellantis STLA $4.2 million for installing emissions-cheating devices in several of its diesel vehicles.
Last Week’s Top Stories
1. Honda and Nissan officially agreed to discuss the merger over the next six months, aiming to finalize it by August 2026. Mitsubishi Motors, a smaller Japanese automaker, already in an alliance with Nissan, is also expected to participate in the merger talks. By combining their resources, Honda and Nissan hope to achieve economies of scale, reduce operational costs and accelerate innovation. Together, the two companies produce approximately eight million vehicles annually, generating a combined turnover of £150 billion. Their merger would position them to better compete with not just Tesla and BYD but also other traditional giants like General Motors and Volkswagen, which are deepening ties to manage the cost burden of next-generation vehicle development.
The merger would also enable Honda and Nissan to standardize vehicle platforms, streamline production processes and pool resources for software and battery technology development. These efficiencies are critical as automakers must simultaneously sustain investments in both gasoline-powered vehicles and EVs to meet diverse market demands.
2. NIO has unveiled the first electric vehicle under its Firefly budget brand—a compact hatchback priced at just over $20,000 in China. Set to debut in China this April, the model is expected to hit European markets in the second half of 2025. However, due to tariffs and markups, its price in Europe will likely be significantly higher. Despite this, Nio believes Firefly will remain competitive, taking on rivals such as BMW’s MINI and Mercedes-Benz’s Smart.
Unlike NIO’s main brand, which relies on a direct-to-consumer sales model, Firefly will adopt a different strategy. Its vehicles will be sold through existing dealer networks alongside other brands rather than in standalone showrooms. According to Nio founder William Li, the Firefly is smaller than the Smart car yet "smarter" than a MINI, offering it a unique edge in the market. Like other NIO vehicles, the Firefly supports battery-swapping technology, hinting at the possibility of a battery-as-a-service (BaaS) rental option when it is officially launched.
3. Stellantis has been fined $4.2 million by CARB for equipping several of its diesel-powered vehicles with emissions-cheating devices. These unapproved devices caused approximately 55 tons of excess nitrogen oxide emissions. Affected models include the 2014-2016 Ram ProMaster, Ram 1500, 2500 and 3500, all with 3.0-liter diesel engines. Stellantis must also recall and modify these vehicles to meet California’s stringent emissions standards.
Of the fine, roughly $2 million will go to California’s Air Pollution Control Fund, while the remainder will support a program incentivizing cargo vessels to reduce speeds during whale migration and ozone season. This is not Stellantis’ first emissions-related penalty. In June 2022, FCA US, a Stellantis subsidiary, pleaded guilty to criminal conspiracy in a federal diesel emissions fraud probe, agreeing to a $300 million settlement. Earlier, in 2019, FCA paid $500 million to settle allegations of emissions cheating on over 100,000 diesel vehicles, with California receiving $78 million.
4. General Motors and Lithium Americas closed their joint venture deal on the Thacker Pass lithium project, a pivotal initiative to bolster North America’s critical minerals supply chain. GM has acquired a 38% stake in the project for $625 million, which includes $430 million in direct funding to the joint venture for Phase 1 construction and a $195 million letter of credit facility. Lithium Americas holds a 62% interest and will oversee project management.For GM, this joint venture is more than just securing a lithium supply. It’s a strategic move to bolster EV production and maintain eligibility for federal consumer incentives. The automaker’s $650 million investment in Lithium Americas represents the largest commitment by a car manufacturer to secure raw battery materials, highlighting the growing need to secure long-term lithium supplies.
Thacker Pass ambitiously targets an annual production capacity of 80,000 tonnes of battery-quality lithium carbonate, split into two phases of 40,000 tonnes each. Phase 1 production is anticipated to commence by late 2027, aligning with the growing demand for domestically sourced lithium. GM’s exclusive access to Phase 1 output ensures a steady supply of lithium carbonate for its proprietary battery cells, a key component of its EV lineup.
GM has a Zacks Rank #2 (Buy) currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price Performance
The following table shows the price movement of some of the major auto players over the last week and six months.
Zacks Investment Research
Image Source: Zacks Investment Research
What’s Next in the Auto Space?
This week, automakers will release their U.S. vehicle delivery numbers for the fourth quarter of 2024. Stay tuned for other usual news updates as well.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
