Japan makes Nissan investment in Tesla court in exchange for U.S. factories

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A senior Japanese group, including former prime minister, has formulated Elon Musk’s Tesla to invest in struggle after merger negotiations collapsed with rival Honda automaker Nissan’s plan.

The new proposal, led by former Tesla board member Hiro Mizuno, is supported by former Prime Minister Yoshihide Suga and his former aide Hiroto Izumi, three people who know the move directly. Several Nissan’s board members knew about the initiative.

Tesla is believed to be a strategic investor because they believe the world’s largest pure electric car manufacturer is keen to acquire Nissan’s plants in the United States. The factories will help it promote domestic manufacturing in response to Donald Trump’s tariff threat.

The plan close to Tesla is to spark fears that Japan’s third-largest automaker could fall into potentially hostile foreign hands after Nissan leaves Honda’s $5.8 billion merger proposal, and Taiwan’s iPhone Assignbler Foxconn, activist and private equity groups circling the group.

Talks with Honda were initially triggered after Foxconn contacted Renault, a partner at Nissan, about buying some stakes in the Japanese automaker last year. After a breakdown occurred in negotiations this month, Foxconn confirmed its interest in acquiring Nissan shares as a means to expand its electric vehicle manufacturing business.

Suga, who served as prime minister in 2021, remains an active figure in Japanese politics and continues to serve as a member of the Japanese House of Commons. He began his political career in Yokohama where Nissan is located.

The proposal envisions a coalition of investors, Tesla is the biggest backer, but also includes investments from Foxconn to prevent Apple suppliers from taking full advantage of the investment.

Nissan and Izumi declined to comment. Mizuno, Suga, Tesla and Musk did not immediately respond to requests for comment.

According to two other people familiar with the matter, Nissan has begun looking for strategic partners in the technology industry in recent weeks, with some board members recommending Tesla and Apple as ideal goals. In November, it launched an emergency turnaround program that included 9,000 job losses as it fell to quarterly losses.

Tesla is one of the most valuable companies in the world, with a market capitalization of approximately $110 million. Historically, it has not invested in a car company, and Musk is focusing on the company and spending its $36 billion in cash on autonomous driving and robotics.

But it also hopes to increase U.S. production to offset the impact of U.S. President Donald Trump’s threatened tariffs. All vehicles sold locally by the group assembled all vehicles, but purchased some components from Mexico and other parts of the world.

Nissan has two assembly plants in Tennessee and Mississippi, with a total annual capacity of about 1 million units, but only 525,000 units were produced there in 2024. As part of the restructuring, the company announced plans to reduce production capacity by 20% to solve the problem. Mark sales. Last week, it said it planned to cut the transformation of two U.S. factories.

Given that the local market is a key growth area for its sales and profits, Nissan may not be easily accepted by the U.S. factory to sell to its competitors.

As Foxconn’s interest in Nissan has been unveiled in recent months, officials from the Ministry of Economic Affairs, Trade and Industry have been paying attention to the political implications and robustness of its national security screening process to deal with Foxconn, which is considered too It’s close.

According to Japanese government officials, it is difficult to justify the deal as Japan welcomes major semiconductor investments in Taiwan, which had previously allowed Renault to buy Sharp at Nissan and Foxconn.

After reorganizing its alliance in 2023, Renault hopes to have a majority of the 36% still owned by the Japanese group with high premiums.

In an interview Thursday, its CEO Luca de Meo said any proposal needs to reflect the value created by the 25-year-old partnership.

“I just hope Nissan management team finds a way to make it work better than it has worked so far,” he said. “I give them all the support they need.”

Stephen Morris’ other reports in San Francisco, Joe Miller of Washington and Ian Johnston of Paris