As 2024 draws to a close, it is clearer than ever that the business-as-usual era of the traditional automotive industry is over.

You won’t find just one reason for it. It’s the high interest rates and new car prices that people can’t afford, the increased competition in once-lucrative China, the shift in consumer interest to electric cars and the high capital costs associated with producing them… the list goes on. As we’ve seen with other industries in transition, not every major player survives unscathed, and it may be time to ask who will go down first in the automotive sector. Is Nissan facing such a settlement?

This is where today’s edition begins Critical Materialsour morning roundup of automotive and technology news. Also in the news today: how Korea’s Hyundai Motor Group plans to take on China’s electric vehicle sector, and how Mexico is getting cold feet over a possible BYD factory as President Trump tries to escalate a trade war before he’s even back in office .

As a program note, your hard-working InsideEVs employees will be on more limited duty over the next few days over Thanksgiving weekend. We will resume normal service next week and in the meantime we wish you and your loved ones a wonderful holiday.

30%: Nissan’s “Make or Break” 12-14 months in advance

2023 Nissan Ariya E-4ORCE

I expect three large, traditional car manufacturers to have been hit particularly hard this year. The first two are Volkswagen and Stellantis, the poster children of Europe’s declining auto sector and what happens when sales in China stop paying the bills like they used to. The other is Nissan. It was once Japan’s No. 2 automaker behind Toyota and itself an early pioneer in electric vehicles.

But Nissan has been in a steady and regrettable decline for years, having struggled with the ouster of the top boss who once held together the shaky 25-year alliance with Renault, a subsequent drain of talent and a protracted renegotiation of it Allianz – and it’s all fair The company lost track of the products when it was distracted by all the chaos. Frankly, it’s hard to understand what’s been going right for Nissan in recent years. Profits fell a staggering 85% in Japan in the second quarter of this year.

Renault is currently in the process of selling off a significant portion of its shares in Nissan. And Nissan desperately needs an equity partner or its survival will be at stake, anonymous officials said Financial Times:

Two people familiar with the talks said Nissan was looking for a long-term, solid shareholder, such as a bank or insurance group, to replace part of Renault’s shareholding as Nissan finalizes the terms of its new electric vehicle partnership with arch-rival Honda . “We still have 12 to 14 months to survive,” said a senior official close to Nissan.

Nissan has not ruled out Honda buying some of its shares, with “all options” being considered as the company implements a series of restructuring measures amid declining sales in China and the United States, the people said.

(…) After capital recalibration last year, the French automaker reduced its Nissan stake to just under 36 percent, including the remaining 18.7 percent in a French trust that it reduced. Nissan received voting rights for its 15 percent stake in Renault, which retains a 15 percent voting share in the Japanese group.

Ouch. As this story indicates, Nissan does not currently sell hybrid cars in the United States, although it once did. Still, hybrid cars are currently working wonders at Toyota, Hyundai, Kia and even Ford; While the Ariya is a solid electric vehicle, Nissan’s old-fashioned internal combustion engines simply aren’t competitive in the 2020s.

You may remember that Nissan and Honda are partnering to collaborate on future electric vehicle powertrains and software. They’re doing this because Japan Inc. is pretty far behind China in making the electric vehicles of the future and they need to band together to win together. Another burgeoning alliance that does the same is Toyota’s collaborations with several smaller partners such as Mazda.

The collaboration between Nissan and Honda is a technical rather than a capital partnership. The story revolves around the idea that Honda (which has also suffered setbacks in China but is doing much better overall) could step in as Nissan’s new financial partner. However, it’s unclear whether either site is interested or whether it would even be effective. And would Honda gain much there?

Since announcing their partnership in August, both Japanese companies had downplayed the possibility of tying up capital, with a person close to Nissan saying Honda’s purchase of a stake would be “a last resort.”

People familiar with the matter said the outcome of the talks would provide a test case for how companies could weather industry upheaval, pitting companies like Stellantis, which emerged from a megamerger, against smaller players like Renault and Nissan that are forging them Technology and regional partnerships. “Is bigger really better?” Or is the partnership model better?” said the senior official close to Nissan, noting that the pursuit of scale would lead to inefficiency at a certain point.

None of this bodes well for Nissan. We’re talking about long-term, capital-intensive businesses, so it’s impossible to imagine a 12- to 14-month window in which to get a bunch of great hybrid and electric vehicles on the road and regain market share in the US and China. My theory is that there could be some sort of restructuring, asset sales, or acquisitions in the future rather than a complete cessation of operations, but how Nissan will fare next year remains unclear.

60%: Hyundai’s secret weapon in the EV wars: “Quality”

Photo by: InsideEVs

Meanwhile, the Korean Hyundai Motor Group is currently doing a lot of things right. Its electric vehicles sell remarkably well, particularly in the US, and its extensive portfolio of hybrid vehicles provides valuable cover. But from what I’ve heard and seen, including from my own team at InsideEVs, Hyundai’s electric vehicles are still technically behind those from China.

So how can Korea fend off this much larger competitor? Quality, said new global CEO José Muñoz Korea JoongAng Daily:

Muñoz also said, “China is a major threat” to the global automobile industry, but Hyundai can counter the cutthroat industry with improved “technological capability” and “quality.”

“Many consumers, when purchasing Chinese products, find that the quality may not be as good as others. They are not satisfied with the quality, maybe there is a mechanical problem or a maintenance problem,” he said.

“It’s time to up our game by offering our customers not only the best quality but also the best service. We were able to attract the best dealers in different countries to invest with us and then invest in facilities with equipment and training to provide better service.”

The quality and reliability of Chinese car manufacturers is difficult to assess. By most accounts, they have gotten significantly better at these things in recent years. But without reliable long-term data in the US (or even Europe), it’s hard to say. However, Koreans are aware of the extent of the threat they face. It’s not like they haven’t dealt with this problem for centuries.

90%: Mexico’s BYD dilemma

Speaking of Chinese automakers: They have made extensive inroads into Latin America, including south of the Texas border. Chinese electric vehicle giant BYD has long been looking for a local factory in Mexico. Due to the US elections, this plant entered into a “wait and see” phase as both the automaker and the Mexican government feared an escalation of a trade war with America.

Basically, BYD insists that every car factory in Mexico should serve the Latin American market. But it’s clear that such a factory could one day be able to export cars to the United States if trade conditions change.

Enter: President Donald Trump, who is not yet in office and is already firing on China and Mexico. According to a report in The Wall Street JournalBYD sounds like it wants to implement this, but Mexico is particularly cautious here:

The plans put Mexico in a dilemma made worse by Trump’s threat on Monday to impose a 25% tariff on Mexican goods. The country is already a major automobile manufacturing center and generally welcomes foreign investment because of the jobs it brings. BYD, which competes with Tesla as the world’s largest electric vehicle maker, would normally be a winner.

But Mexican officials worry that a BYD plant would send the wrong message to Trump and the trade hawks around him by suggesting that Mexico wants to be a back door for Chinese companies to sell to Americans. The president-elect is also targeting Mexico over immigration and fentanyl smuggling, the issues he cited in the tariff threat.

Mexico says it does not want to act as a transit point for Chinese-made goods and has made progress in combating illegal immigration. The U.S. and Canada will need to be convinced of this when talks begin next year to extend the U.S.-Mexico-Canada free trade agreement reached during the first Trump administration.

(…) The federal government is unhappy with BYD’s timing and does not want to provoke Trump, a Mexican official said. Federal approval would be essential for any BYD project in Mexico, as the company would need environmental and import permits and other government support.

I still believe that BYD’s entry into the US market is a question of question Whennot If. But everyone involved has to find their way in a new landscape.

100%: Where do you see Nissan in 14 months?

Nissan Hyper Force Concepts

Imagine for a moment that it is early 2026. Will the once formidable Japanese automaker emerge from this crisis or does it exist in a completely different form? Let us know your best guesses in the comments.

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