Nissan Stock Surges on Reports It is in Talks With Tesla. How the Odd Pairing Could Work?

Nissan Motor’s stock surged on Friday after reports surfaced that the Japanese automaker was exploring a potential acquisition deal involving Tesla. The speculation fueled investor optimism, leading to a significant rally in Nissan’s shares.

‍

Shares of Nissan climbed as much as 13% during trading in Tokyo before closing the session with a 9% gain. The surge followed a report from the Financial Times, which cited three sources with direct knowledge of the matter, stating that a high-level Japanese group was working on a proposal for Tesla, led by Elon Musk, to invest in Nissan. The group spearheading the effort includes former Japanese Prime Minister Yoshihide Suga and Hiro Mizuno, a former Tesla board member, according to the report.

‍

This news comes at a pivotal moment for Nissan, as the automaker recently saw its merger talks with Honda fall through. Nissan had been in discussions with Honda about a potential alliance, but those negotiations ultimately collapsed, leaving Nissan in search of other strategic partnerships.

‍

Meanwhile, Tesla’s stock showed a muted reaction to the report, edging lower in premarket trading. The EV giant, part of the so-called "Magnificent Seven" group of high-profile tech stocks, has seen its share price decline by 12% so far this year, facing challenges in an increasingly competitive electric vehicle market.

‍

For Tesla, an investment in Nissan could offer significant benefits, particularly by providing access to the Japanese automaker’s manufacturing infrastructure in the United States. Nissan currently operates two plants in Tennessee and one in Mississippi, employing over 12,000 workers. While Tesla manufactures all of its U.S.-sold vehicles domestically, it also relies on components sourced from Mexico and other international suppliers.

‍

According to the Financial Times, Nissan’s U.S. plants produced only 525,000 vehicles in the past year, despite having the capacity to manufacture up to 1 million units annually. This suggests that Tesla could potentially leverage the underutilized production facilities to expand its operations without having to build new factories from scratch, reducing costs and increasing efficiency.

‍

Beyond Tesla, the report also noted that Foxconn, the Taiwanese electronics manufacturer best known for assembling Apple’s iPhones, has shown interest in Nissan. However, a Tesla investment in Nissan could help deter a full-scale takeover by Foxconn. That said, the report indicated that Foxconn might still play a role in the deal as a minority investor, though details remain unclear.

‍

If the potential deal moves forward, it could significantly reshape Nissan’s role in the evolving electric vehicle industry. A partnership with Tesla would provide Nissan with access to cutting-edge EV technology and manufacturing expertise, potentially strengthening its position in the global EV market. For Tesla, the acquisition of Nissan’s U.S. production facilities could provide a strategic advantage, allowing it to scale operations more efficiently amid growing demand for electric vehicles.

‍

While the reported discussions are still in the early stages, the prospect of a Nissan-Tesla collaboration has already sparked considerable market interest. Investors will be closely watching for further developments as both companies navigate the rapidly shifting automotive landscape.

‍