Foxconn approaches Honda, and Japan wants Tesla to invest in Nissan, according to reports

Following the breakdown of its merger talks with Honda (7267.T), the Financial Times reported on Friday that a high-level Japanese group, including a former prime minister, had developed plans for Tesla (TSLA.O) and opened a new tab to invest in Nissan (7201.T).

According to a different Nikkei newspaper article, Foxconn (2317.TW), a company based in Taiwan, has suggested partnering with Honda with the eventual goal of establishing a four-way framework that would also involve Nissan and Mitsubishi Motors (7211.T), opens new tab.

According to the Financial Times, a Japanese group that is behind Tesla’s intentions to invest in Nissan thinks the Elon Musk-led company will turn into a strategic investor since it is eager to buy Nissan’s factories in the US.

With backing from former Premier Yoshihide Suga and his former adviser Hiroto Izumi, the idea is being spearheaded by former Tesla board member Hiromichi Mizuno, the newspaper reported, citing unnamed sources.

However, other analysts question Tesla’s desire to purchase plants in the United States, pointing to the company’s large capacity at current facilities and the initial drop in annual deliveries in 2024.

Last month, Tesla stated that it anticipated that this year will see a return to growth in the vehicle business.

According to Suga’s office, no strategy to get Tesla to invest in Nissan was known to them. Nissan’s home prefecture, Kanagawa, is represented by Suga, who resigned as prime minister in 2021 but is still a member of Japan’s lower house.

Mizuno stated in a social media post that opens a new tab that he had “absolutely no involvement” in the events detailed in the FT piece. He also indicated that, considering Tesla’s distinctive factory design, he doubted that the company had any interest in Nissan facilities.

When asked about the report, Tesla did not reply, while Nissan declined to comment. Izumi could not be reached by Reuters right away.

According to Matt Britzman, a senior equities analyst at Hargreaves Lansdown, Tesla would not benefit from purchasing infrastructure from a legacy automaker.

“Tesla’s secret weapon is the novel way its factories have been designed and optimized for its cars,” Britzman stated.

Nissan’s stock ended the day 9.6% higher following the FT article. Last week, negotiations to create a $60 billion vehicle firm between the carmaker and Honda came to an end. According to Nissan, it will look for new alliances.

Some Nissan board members have recommended Apple (AAPL.O) and Tesla as the best strategic investors, according to the Financial Times.

A request for comment was not answered by Apple.

Seth Goldstein, a Morningstar analyst, suggested that buying Nissan’s U.S. facilities would make sense given President Donald Trump’s intentions to impose additional auto import taxes as well as separate levies on Canada and Mexico.

“The cost to build a new auto plant is high, so if Tesla is able to acquire an existing plant that greatly reduces the cost,” he explained.

Despite its lack of interest in investing in auto firms, Tesla’s $36.56 billion cash and equivalents at the end of 2024 gave it a sizable war chest for any purchase.

According to sources who previously spoke to Reuters, Nissan was open to collaborating with new companies, and Foxconn, the biggest contract electronics maker in the world, was considered as one such partner.

In a further article published on Friday, the Nikkei daily stated that Foxconn sought to establish a more comprehensive structure for collaboration in order to rival Chinese EV manufacturers and Tesla.

Honda refrained from responding to the Nikkei report. A request for comment from Foxconn representatives was not immediately answered.

Last week, Nissan CEO Makoto Uchida stated that management-level discussions had not taken place between Nissan and Foxconn. A day prior to Uchida’s comments, the chairman of the Taiwanese company had stated that it would think about investing in Nissan in exchange for collaboration.