Nissan (7201.T) stock surged initially but eventually pared gains on reports the Japanese automaker had a new dance partner — Tesla.
Whether a deal with the EV juggernaut makes sense is another story.
The Financial Times reported a Japanese group, including former Prime Minister Yoshihide Suga and led by former Tesla board member Hiro Mizuno, drew up plans for Tesla to invest in Nissan. Per the report, the group believed Tesla could be a "strategic investor" in Nissan and would be amenable to acquiring Nissan's large manufacturing footprint in the US.
Nissan shares in Japan jumped as much as 11% in overnight trading following the report.
The latest tie-up report comes after the boards of Honda and Nissan decided to mutually terminate their agreement signed last August for a proposed tripartite merger that would have also included Mitsubishi.
Honda entered the picture after Taiwanese device maker Foxconn indicated it was interested in acquiring Nissan to build out its EV production capabilities.
The Japanese group's plan to approach Tesla and create a new consortium to invest in Nissan came about after fears Nissan would be controlled by "hostile foreign hands," per the FT report.
Any new consortium that would include Tesla would also include other minority investors, like Foxconn. "If cooperation requires [purchasing Nissan shares], we will consider it," Foxconn chairman Young Liu told reporters last week. Liu was quick to add that Foxconn desired cooperation, not that it needed to buy shares to achieve this outcome.
Makoto Uchida, director, representative executive officer, president, and CEO of Nissan Motor Corporation, and Toshihiro Mibe, director, president, and representative executive officer of Honda, at a joint press conference on their merger talks in Tokyo, Japan, on Dec. 23, 2024. (REUTERS/Kim Kyung-Hoon) ·REUTERS / Reuters
On his platform X.com (formerly Twitter), Tesla CEO Elon Musk indicated using Nissan's plants wasn't part of Tesla's future plans. "The Tesla factory IS the product. The Cybercab production line is like nothing else in the automotive industry," he posted, referring to Tesla's upcoming Robotaxi that would use a new "unboxed" manufacturing process.
Musk didn't outwardly pour water on the reports. But Mizuno, the former Tesla board member, took to X.com as well to deny his involvement in any such scheme.
"I have absolutely no involvement in what is reported in this article and am unaware of any such moves by the Japanese government," Mizuno posted. "I am no longer with Tesla but personally doubt if Tesla has any interest at all in Nissan factories as Tesla's factory design is so unique,” he added, echoing Musk's sentiment.
While both Musk and Mizuno said Nissan's manufacturing footprint and capabilities wouldn't be a good fit for Tesla, that isn't necessarily the case. Nissan has two large assembly plants in Smyrna, Tenn., and Canton, Miss., with the ability to produce 1 million vehicles a year. Nissan's utilization of those plants is only half that — and the company has said it would cut capacity at the plants as supply of unsold vehicles piles up.
Nissan bound? Tesla Cybercab or Robotaxi two-passenger battery-electric self-driving car and Tesla Cybertruck battery-electric pickup truck on display at the 2025 Autosalon on Jan. 10 in Brussels, Belgium. (Sjoerd van der Wal/Getty Images) ·Sjoerd van der Wal via Getty Images
Tesla's vehicles assembled in the US and globally are built using traditional manufacturing techniques, though the company utilizes robots and "gigacasting" more than other automakers. The company's upcoming cheaper EVs, which would likely be even bigger-volume sellers for the company, will use a combination of traditional manufacturing and elements like the unboxed process.
"Nissan does offer excess capacity around the world. The automaker's large plants feature multiple assembly lines and could, in theory, divide a plant into Nissan products and Tesla products," auto manufacturing expert Sam Fiorani of AutoForecast Solutions told Yahoo Finance.
Nissan's vehicle assembly plant in Smyrna, Tenn. (Nissan) ·Nissan
It's possible Tesla could retool many of Nissan's unused production lines at its US factories to build the cheaper EVs. Tesla had originally planned to use a new facility in Mexico to build cheaper EVs, but with the Trump administration's plans to heavily tariff products coming from Mexico and Canada, Nissan's plants in the US look attractive.
Presuming the threatened tariffs take effect, Nissan's plant in Mississippi could be ready relatively quickly, Fiorani said, adding that retooling any existing plant will take investment, but starting with "relatively modern facilities would shorten Tesla's time to market."
He added: "The question remains: Is there really that much untapped market for Tesla to need another North American plant?"
That's the big question. Another is whether it makes sense financially.
"Anything is possible, but Tesla has a unique manufacturing process that may not make it economically feasible to implement at Nissan," said Tim Hynes of Debtwire, a leveraged finance and distressed asset data firm. It may be more efficient to build a plant from scratch with Tesla's help than try to modify existing processes, Hynes added.
On the plus side, Nissan's plants are not unionized, similar to Tesla's existing plants in California and Texas, meaning manufacturing costs would be relatively lower and comparable to its current costs.
For its part, Nissan would not like to lose control of its US plants as it is a huge advantage for the Japanese automaker to have localized production for its vehicles in the US.
But given the Japanese automaker's current condition, it may not have a choice.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on X and on Instagram.
