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Owners of aging vehicles are ultimately faced with a choice. Fix their bangers – once more – sell it. So, it’s actually a challenge facing Nissan’s new CEO, Ivan Espinosa. But he can do a little bit of both.
Espinosa, appointed following the collapse of merger talks with Honda, has made a brave effort to deal with the Japanese automaker’s long-standing struggles. Nissan’s new plans include shutting down excess capacity, cutting staff and launching new products. And the group reportedly plans to raise about $7 billion from assets sales and debt market taps.
However, this is just a start. According to research firm Pelham Smithers, $7 billion may sound like a huge number for companies with a US dollar market value of less than $1 billion, but Nissan will lose up to $3.5 billion in cash from its core business this year.
Nissan wants to make cash positive in 2026. With cost savings, it will grow thanks to new car models. And the cash on that balance sheet is far beyond that borrowing. But it risks finding lunch already eaten. The second largest market after North America is China, where local electric vehicle manufacturers such as BYD have wrapped foreign brands. The more widely offered EVs are weak, and the spread of BYD in Europe and Japan should be a source of concern.
With so many challenges, it looks like Nissan’s road, as standalone companies could run out of quickly. Certainly, the automakers say they are open to partnerships. But with who? Legacy automakers around the world struggle with variations on the same problem.
It should encourage Espinosa to think outside the box. Reports suggest that Nissan may be interested in partnering with large US high-tech groups. But the best option may be Foxconn, a Taiwanese white-label smartphone that previously was Nissan, and itself included an EV. Recently, we made a groundbreaking deal to build a Mitsubishi Motors car.
This is bold in two ways. It sends shots to the automaker’s bow everywhere. He mainly believes that designing and manufacturing a car should go together. It also increases the chances of Nissan leading the x to its own production capacity. Cutting off work and closing plants is difficult for automakers everywhere. This is especially true in Japan.
But Espinosa’s restructuring plan has already done some of the heavy lifting. With the gap between cars and other types of advanced electronics narrowing and BYD continues to move forward, there are few points to combat the future. It turns out that Nissan and Foxconn share a common destination.
camilla.palladino@ft.com
