Among the reasons for Honda Motor to enter merger talks with Nissan Motor, one looms large: China.

Chinese automakers captured their smallest share of Europe's electric vehicle (EV) market in eight months after new tariffs increased the cost of importing cars to the region by as much as 35%.

The automotive supply chain is increasingly worried about the potential expansion of US tariffs to Southeast Asia.

Rising vehicle age and repair costs in the US, the world's largest automotive aftermarket (AM) service and repair market, have created substantial opportunities for Taiwan's auto parts industry. The combination of increasing car loan interest rates and aging vehicle fleets has generated strong demand for AM parts, strengthening operations across the supply chain.

China's battery materials sector is thriving, backed by government subsidies, low electricity costs, and cheaper labor, enabling aggressive investment. In contrast, South Korean firms, lacking comparable support, are struggling with mounting losses and potential market exits, threatening the stability of South Korea's EV supply chain.

Chinese automakers, including NIO, XPeng Motors, BYD, and Taiwan's Foxconn, are reportedly exploring partnerships with cash-strapped Nissan, leveraging its global distribution networks to enter the US market, according to Japanese supplier Ibiden via Chinese media.

Taiwan's Sanyang Motor (SYM) and the Industrial Technology Research Institute (ITRI) have reached a significant milestone in their joint hydrogen fuel cell motorcycle project, successfully completing a key road test.

Nissan and Honda, two of Japan's automotive giants, are set to hold merger talks on December 23, 2024. Renault, Nissan's largest shareholder and a French automotive leader, is reportedly open to the proposed merger, signaling a pivotal moment for the Japanese automakers.

Germany and Japan have built powerful automotive manufacturing industries over decades, establishing global dominance with brands like Toyota, BMW, Mercedes-Benz, Volkswagen, Nissan, and Honda. However, the rapid rise of China's electric vehicle (EV) industry is now transforming an automotive sector that has remained stable for decades.

The landscape of Japan's automotive industry faces potential reshaping as Honda and Nissan explore integration possibilities, complicated by Foxconn's reported interest in acquiring Nissan shares. This development could significantly impact both automakers' strategies in addressing the competitive electric vehicle (EV) market landscape.

Chinese carmakers are rumored to be targeting financially troubled Nissan as a means of indirect entry into the US market. Rumors have also pointed to Foxconn as a possible suitor for an acquisition or potential joint control with a Chinese company.