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(Bloomberg) -- Nissan Motor Co. shares jumped after the Financial Times reported that a high-level Japanese group has drawn up plans to seek investment from Elon Musk’s Tesla Inc. to aid the struggling carmaker.
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The group believes the electric vehicle maker is interested in acquiring Nissan’s plants in the US, the newspaper reported, citing people it didn’t identify. The proposal envisions a consortium of investors, with Tesla as the largest backer, but also includes the possibility of a minority investment by Hon Hai Precision Industry Co. to prevent a full takeover by the Apple supplier, the report said.
Nissan’s shares jumped more than 12% on the news of the potential investment, before closing 9.5% higher in Tokyo.
Nissan has found itself in need of a lifeline once again after a deal with Honda Motor Co. to combine both brands under a single holding company formally ended earlier this month. While Nissan is now on the hunt for a new partner — Chief Executive Officer Makoto Uchida has said it would be difficult to survive without one — the idea of a tie up with Tesla was met with skepticism from industry watchers.
That’s partly due to Tesla’s own struggles as EV demand slows: last month it reported a drop in annual sales for the first time in more than a decade, and it’s cut more than 10% of its workforce. But buying a stake in another carmaker would be a notable change from its usual investments, which focus on businesses that support its high-tech EV ambitions.
It’s also unclear which Nissan assets would be a draw. The automaker has three plants in the US and has previously warned it may slow a planned ramp up of EV production at its facility in Canton, Mississippi, due to uncertainties about energy and trade policies under Donald Trump’s presidency.
“For Tesla, it’s difficult to think there are any merits in buying Nissan,” said Yasuhiko Hirakawa, head of investment at Rakuten Investment Management Inc. “It obviously has no need for legacy assets like engines and assembly lines. It’s difficult to imagine something Tesla needs that Nissan can offer.”
The proposal is being led by Hiromichi Mizuno, former chief investment officer of the Japan’s Government Investment Fund, who was on Tesla’s board as an independent director from 2020 to 2023, the FT reported. The push is also said to be supported by ex-Prime Minister Yoshihide Suga, it said.