Nissan Stock Surges on Tesla Deal Rumors, but Collaboration Uncertain

Key Stock Movements:

* NSANF: +5.63%
* NSANY: +5.57%
* TSLA: -4.46%
* HMC: +0.11%
* HNDAF: 0.00%

Nissan-Tesla Partnership Rumors

Nissan (7201.T) shares initially surged but later retreated after reports of a potential partnership with electric vehicle (EV) giant Tesla. According to the Financial Times, a Japanese group led by former Prime Minister Yoshihide Suga has proposed Tesla's investment in Nissan. The group believes Tesla could be a "strategic investor" and acquire Nissan's manufacturing facilities in the US.

Background: Honda-Nissan Merger Termination

The latest partnership rumors follow the termination of a proposed three-way merger between Honda, Nissan, and Mitsubishi. Honda withdrew from the agreement, while Taiwanese device maker Foxconn expressed interest in acquiring Nissan for its EV production capabilities.

Tesla's Response

Tesla CEO Elon Musk dismissed the idea of using Nissan's plants, stating that Tesla's factory design is unique and not compatible with Nissan's processes. Former Tesla board member Hiro Mizuno, who was allegedly involved in the partnership plan, also denied any involvement.

Nissan's Manufacturing Capabilities

Nissan operates two large assembly plants in the US with a combined annual production capacity of 1 million vehicles. However, the plants are currently underutilized at half capacity, and the company has announced plans to cut capacity amid unsold vehicle inventory.

Tesla's Manufacturing Needs

Tesla currently assembles its vehicles using traditional manufacturing techniques but is planning to introduce cheaper EVs using a combination of traditional and innovative processes. Nissan's excess manufacturing capacity could potentially be utilized by Tesla for its lower-cost EV production.

Financial Considerations

Experts believe that implementing Tesla's unique manufacturing process at Nissan's plants could be financially challenging. Building a new facility with Tesla's help may be more efficient than modifying existing processes.

Nissan's Position

Nissan would likely resist losing control of its US plants, as localized production provides a significant advantage. However, the company's financial situation may force it to consider such a move.