Would a Tesla-Nissan Partnership Be a Game-Changer for the EV Market?

Exploring the potential impact of Tesla investing in Nissan’s manufacturing capabilities / Sjoerd van der Wal/Getty Images

Reports have emerged suggesting that Tesla might invest in Nissan, sparking speculation about how such a collaboration could reshape the electric vehicle (EV) landscape. According to the Financial Times, a Japanese group led by former Tesla board member Hiro Mizuno and former Prime Minister Yoshihide Suga proposed a plan for Tesla to become a strategic investor in Nissan. This potential deal aims to leverage Nissan’s extensive manufacturing footprint in the U.S. to support Tesla’s future production expansion.

Following the news, Nissan’s stock surged by 11% during overnight trading in Japan, before paring some of those gains. This development comes on the heels of Nissan and Honda officially terminating their proposed three-way merger with Mitsubishi. The termination of this agreement reignited concerns that Nissan could be vulnerable to foreign acquisition, prompting discussions of alternative investment partnerships.

Tesla’s Stance on Nissan’s U.S. Factories

Tesla CEO Elon Musk quickly addressed the speculation via his social media platform X.com (formerly Twitter). Musk stated that Tesla has no plans to utilize Nissan’s manufacturing facilities, emphasizing that Tesla’s factory model is entirely unique. He highlighted the forthcoming "unboxed" manufacturing process for Tesla’s Robotaxi, which differs significantly from traditional automotive production techniques.

Mizuno, who was cited in the Financial Times report, also distanced himself from the rumors, asserting that he has no involvement in such discussions. He echoed Musk’s sentiment, stating that Tesla’s factory designs are so distinct that Nissan’s existing infrastructure may not align with Tesla’s long-term production strategies.

Nissan’s Manufacturing Capacity and Potential Benefits for Tesla

Despite Musk’s remarks, some industry analysts believe Nissan’s U.S. factories could offer strategic advantages to Tesla. Nissan operates two major assembly plants in Smyrna, Tennessee, and Canton, Mississippi, with a combined annual production capacity of one million vehicles. However, these plants currently operate at only about half of their full capacity. Nissan has already indicated plans to reduce production due to rising inventories of unsold vehicles.

With Tesla’s plans to introduce lower-cost EV models, access to existing production infrastructure could accelerate its expansion. Tesla originally intended to build its next-generation affordable EVs at a planned facility in Mexico. However, potential tariffs on Mexican and Canadian imports under a future Trump administration could make U.S.-based production more appealing. Nissan’s Mississippi plant, if retooled, could allow Tesla to fast-track its production timeline while mitigating geopolitical risks.

Challenges of Integrating Tesla’s Unique Manufacturing Approach

While Nissan’s underutilized capacity presents an opportunity, significant challenges exist. Tesla employs advanced manufacturing techniques such as gigacasting, robotics-driven assembly, and its forthcoming "unboxed" process. Retrofitting Nissan’s conventional production lines to accommodate Tesla’s proprietary methods would require substantial investment. Some experts argue that it may be more cost-effective for Tesla to build a new factory from the ground up rather than modifying an existing one.

From a labor perspective, Nissan’s U.S. factories offer an advantage as they are not unionized, aligning with Tesla’s current operations in California and Texas. This factor could help Tesla maintain lower production costs if it were to explore using Nissan’s facilities. However, Nissan is unlikely to relinquish control of its U.S. factories without significant incentives, as localized production remains a strategic advantage for the Japanese automaker.

The Future of Nissan’s Investment Prospects

Beyond Tesla, other entities have expressed interest in Nissan’s manufacturing capabilities. Taiwanese electronics giant Foxconn has indicated its willingness to collaborate with Nissan on EV production, potentially as part of a broader consortium of investors. Foxconn Chairman Young Liu recently stated that while his company is open to cooperation, acquiring a stake in Nissan is not a prerequisite for partnership.

As Nissan navigates its uncertain future, the question remains whether Tesla—or any other strategic investor—will ultimately step in. With competition in the EV market intensifying and production capacity becoming a critical factor in scaling operations, Nissan’s manufacturing footprint remains an attractive asset. Whether Tesla finds value in such an acquisition will depend on its evolving production strategy and cost-benefit analysis.