"Pride goeth before destruction, and a haughty spirit before a fall," reads the Book of Proverbs, chapter 16, verse 18. I'm no Biblical scholar, but I think it's unlikely King Solomon wrote that line about Nissan. But you have to admit it fits in this context—especially since "pride" at Nissan is being cited as a reason its $60 billion merger with Honda blew up, leaving its future feeling murkier than ever.
Welcome back to Critical Materials, our morning roundup of the latest in auto industry and mobility technology news. Also on deck today: Democrats hit back at President Trump's plan to freeze electric vehicle charger funding, and Tesla CEO Elon Musk gets more bad news as China's BYD flexes its AI game. Let's dig in.
30%: Nissan Fought Big Cuts, Junior Partner Status In Honda Merger Deal: Report
Nissan’s proposed $60 billion merger with Honda was supposed to solve a lot of problems. It would’ve provided the flagging Japanese automaker with needed capital and resources after years of financial decline; given it a good partner and scale to develop EVs, software and battery tech to compete with China; and kept the lagging Japanese auto industry as a whole from losing one of its biggest players.
What was in it for Honda, of course, was consistently less clear.
But last week, we learned that those merger talks collapsed not long after they began, and reports are finally trickling out of Japan as to why.
According to Reuters, Honda’s CEO told Nissan’s that the latter company would have to become a mere subsidiary, which was not part of the original deal and didn’t go over well. Nissan officials also seemed deeply reluctant to move quickly with detailed turnaround plans or to close down whole factories as part of needed cost cuts:
The merger talks unraveled in a little more than a month due to Nissan's pride and insufficient alarm about its predicament, as well as Honda's abrupt decision to revise the terms and propose that Nissan become a subsidiary, according to six people familiar with the matter.
But the merger discussions quickly hit a wall over calculating the shareholding ratio for the combined company, two of the people said.
In private, Uchida exhibited doubts about the deal's prospects, one person said. Honda managers complained that Nissan's decision-making was too slow, four people said. A public update on the talks was originally set for the end of January before being pushed back to mid-February.
Honda managers felt Nissan's turnaround strategy lacked details and were frustrated by what they saw as an insufficient reduction in factory capacity, two sources said.
Analysts weren’t especially kind to Nissan as a result, with one telling Reuters that Japan’s government is especially out of touch on how dim Nissan’s prospects are:
"I think it's a management problem," said Julie Boote, analyst at research firm Pelham Smithers Associates, about the turmoil at Nissan. "They're completely overestimating their position and their brand value, and their ability to turn around the business."
"[The Japanese government ] doesn’t have a realistic view of what's happening in the auto industry and what really needs to happen with Nissan."
So what now? Well, Nissan is looking for another partner, and Taiwan’s Foxconn is clearly interested. That may be more palatable to Japan than it seems; a former Nissan exec leads Foxconn’s EV business, and the company itself is a top investor in the Japanese electronics giant Sharp.
Either way, Nissan seems to think it’s still some kind of titan (pardon the pun, but I had to) when it’s not only losing to conventional competitors but far more advanced ones making modern EVs and software-defined vehicles. We’ll be keeping an eye on this one for sure.
60%: Trump's Charger Freeze Order Illegal, Dems Say
He’s not even four weeks into his second tenure in the White House, but President Trump is already under fire from various groups who say his practice of freezing funds for federal programs—money already allocated by Congress—is against the law. And it’s been challenged in court several times already.
That now includes EV charger funding, as InsideEVs first reported last week. But yesterday, Democratic officials hit back, and asked for receipts on whether Musk was involved. Here’s Reuters again:
On Feb. 6 the U.S. Transportation Department said it was suspending the electric vehicle charging program and rescinding approval of state EV charging plans pending a new review.
The Democratic senators on the committee led by Senator Sheldon Whitehouse said the action was in “blatant disregard of the law.” Whitehouse asked for any emails that would show if President Donald Trump’s advisor and Tesla CEO Elon Musk was involved in the decision.
On the subject of impoundment in general, Sen. Ted Cruz, R-Texas, said he thinks the Trump administration is teeing up a Supreme Court case to try and find out if the president has such power. Like it or not, EVs and EV charging are now embroiled in that fight.
90%: Tesla’s BYD Problem Grows, And So Does Its 'Musk Distraction' Problem
Speaking of Musk, he’s got a growing set of headaches out of China these days. BYD made more EVs last year than Tesla did (a first, though Tesla still edged out more global sales). And its new deal with AI upstart DeepSeek for autonomous vehicles has Tesla investors concerned about whether it can be first and best at delivering on those big robotaxi dreams.
Plus, Tesla investors seem to be concerned about Musk's growing involvement in the U.S. government while he's promising them big returns from AI investments. Here's CNBC:
Tesla shares dropped 6% on Tuesday after Chinese rival BYD announced plans to develop autonomous vehicle technology with DeepSeek, and said it would offer its Autopilot-like system in nearly all of its new cars, adding to fears that Elon Musk’s company is falling behind the competition.
There’s also growing concerns surrounding Musk’s distractions outside of Tesla, after news surfaced that the world’s richest person is offering to lead an investor group in purchasing OpenAI, while he steps up his work with President Donald Trump’s White House.
Tesla’s stock price has slid for five straight days, falling close to 17% over that stretch to $328.50, and wiping out over $200 billion in market cap.
Investors already concerned about Musk’s hefty commitments beyond his trillion-dollar EV company have more reason for trepidation after events that unfolded on Monday. Musk’s attorney, Marc Toberoff, confirmed to CNBC that Musk was leading a consortium of investors in a $97.4 billion bid for OpenAI.
If Musk is the "heart and lungs" of the Tesla story, as some investors like to say, we're about to find out how many places he can be at once.
100%: Where Does Nissan Land In Five Years?
Let's game this out a bit more. It's 2030: the year when most experts predict a majority of new cars sold in most global markets will be electrified in some way, and advanced software will be more prevalent than ever. Where do you see Nissan in that space? Does it still exist at all? Did it swallow its pride, make the cuts necessary to survive and get ahead? Or is it a component in some other company's conglomerate? Let us know in the comments.
Contact the author: patrick.george@insideevs.com
