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Honda is getting into bed with Nissan

Nissan is considering entering into a partnership with rival Honda to jointly develop electric vehicles (EV), Japanese media reported.

Japanese automakers have been slow to develop EVs, particularly in comparison to Chinese competitors such as BYD, causing them to lose ground in the Chinese market and leaving them vulnerable at home.

Both Honda and Nissan are considering cutting production capacity in China as sales decline, while BYD earlier this month said it will introduce a series of new models and expand its dealership network in Japan.

Nissan declined to comment on the reports, while a spokesperson for Honda said the company “didn’t announce the news and is unable to comment.”

Electric Nissan Ariya

Nissan’s Chief Executive Officer Makoto Uchida on Wednesday said the automaker is “facing a tough business environment.”

Bloomberg Intelligence senior auto analyst Tatsuo Yoshida said that “it seems Nissan has been pushing for the deal, which is quite understandable. However, Honda, which was approached, may be willing to take advantage of a good deal.”

“If you ask whether it is a positive or a negative, it is more difficult to find a negative in this case,” he said.

Honda last year shelved plans to develop budget-priced battery-powered cars with General Motors (GM).

The two automakers also are likely to delay the deployment of self-driving taxis in central Tokyo, after GM’s Cruise unit grounded its entire US fleet after its California license was suspended.

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