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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Owners of ageing vehicles eventually face a choice. Fix up their banger — yet again — or sell it. That is, in effect, the conundrum that faces Nissan’s new chief executive Ivan Espinosa. He, though, can do a bit of both.
Appointed following the collapse of merger talks with Honda, Espinosa is making a valiant effort to address the Japanese carmaker’s long-standing struggles. Nissan’s new plan involves closing excess capacity, cutting staff and launching new products. And the group is reportedly planning to raise about $7bn from selling assets and tapping the debt markets.
This is only a start, though. While $7bn might sound like a big number for a company whose market value in US dollars is less than $10bn, Nissan may end up losing up to $3.5bn of cash from its core operations this year, according to research firm Pelham Smithers.
Nissan hopes to turn cash positive in 2026 as cost cuts feed through, and then grow thanks to new car models. And the cash on its balance sheet far exceeds its borrowings. But it risks finding its lunch already eaten. Its second-largest market, behind North America, is China, where local electric-vehicle manufacturers such as BYD have lapped foreign brands. Its EV offering more broadly is weak, and BYD’s expansion in Europe and Japan should give it cause for concern.
With so many challenges, it looks like Nissan’s road as a standalone company may soon run out. Indeed, the carmaker has said it is open to partnerships. But with whom? Legacy carmakers the world over are struggling with variations on the same problems.
That should encourage Espinosa to think outside the box. Reports have suggested that Nissan might be interested in a partnership with a big US tech group. But its best bet may lie with Taiwanese white-label smartphone maker Foxconn, which previously circled Nissan, and which is itself getting into EVs. It recently struck a landmark deal to make cars for Mitsubishi Motors.
This would be daring in two ways. It would send a shot across the bows of carmakers everywhere, who mostly still believe the designing and manufacturing of cars should go together. It would also raise the prospect of Nissan taking the axe to its own production capacity. Cutting jobs and shutting plants is hard for carmakers everywhere; especially so in Japan.
But Espinosa’s restructuring plan is doing some of the heavy lifting already. As the divide between cars and other kinds of advanced electronics narrows, and BYD continues to advance, there is little point fighting the future. Nissan and Foxconn could find they share a common destination.
