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Nissan & Honda EV and Software Collaboration: Impact on Profitability

This IB Business and Management Internal Assessment examines how Nissan’s collaboration with Honda in electric vehicle (EV) and software development could enhance Nissan’s profitability. The paper evaluates the partnership through Porter’s Five Forces, the BCG Matrix, and profitability ratio analysis, using secondary data from reliable industry sources. It highlights how shared EV platforms, advanced software technologies, and component standardization can reduce costs, accelerate innovation, and strengthen market competitiveness. The study concludes that this tech-focused alliance has the potential to drive sustainable growth for Nissan in the evolving automotive sector.

August 14, 2025

* The sample essays are for browsing purposes only and are not to be submitted as original work to avoid issues with plagiarism.

Research Question: To what extent will the collaboration between Nissan and Honda in electric

vehicle and Software development help Nissan improve its profitability?

Key concept: Sustainability

Student's Name

Professor's Name

Course

Institution

Date

Table of Contents

Introduc)on ....................................................................................................................................3

Analysis and Discussion ..................................................................................................................4

Porter's Five Forces .....................................................................................................................4

BCG Matrix .................................................................................................................................6

Proﬁtability Ra)os ......................................................................................................................9

Conclusion ....................................................................................................................................11

References ....................................................................................................................................13

Suppor)ng Documents .................................................................................................................14

Introduction

The global automotive industry is characterized by high levels of competition and

innovation. The innovation is mainly because many automotive companies continue to

manufacture high-quality and diversified car models. All the companies in this industry are in

search of high customer satisfaction, which leads to a rise in the market share of the individual

companies. Honda and Nissan are some of the major automotive companies based in Japan. The

companies entered into an agreement in 2024 to collaborate in software development and the

manufacturing of electric vehicles (SD 1). The companies had also proposed a merger, but it was

called off after Nissan disagreed with the proposal to become a subsidiary of Honda. Another

agreement was signed in August 2024 for the companies to conduct joint research in

technologies. In relation to the sustainability concept, this assessment focuses on the extent to

which the collaboration between the companies will help Nissan improve its profitability. The

rationale is that Nissan made a loss of 670.9 billion Yen, from a profit of 426.6 billion Yen in

2023 (SD 4). The main reason for the loss is the collapse of the alliance between Nissan and

Renault. This essay, therefore, focuses on answering the research question "To what extent will

the collaboration between Nissan and Honda in electric vehicle and Software development help

Nissan improve its profitability?"

The research will use secondary data obtained from journal articles, news articles, and

company reports published by Nissan and Honda. The rationale for the use of this secondary data

is that it provides enough resources on the collaboration between these companies and how the

collaboration is beneficial to both organizations. Therefore, these sources will be selected on the

basis that they are recent and published by reliable sources. In addition, the report will use

various business management tools that will help analyze the collected data. Some of the

selected tools include Porter's five forces analysis, BCG matrix, and profitability ratio analysis.

Analysis and Discussion

Porter's Five Forces

Porter's Five Forces framework analyzes the competitive forces that shape an industry

and their implications for a company's profitability. The tool focuses on how the collaboration

between Honda and Nissan in software development and the making of electric vehicles will

impact the levels of competitiveness in the global automotive industry. The tool also majors on

how this collaboration will influence the financial sustainability of Nissan.

Threat of New Entrants (low)

This force focuses on the ease with which other automotive companies are joining the

industry. This force is low due to the high capital requirements and technology that new

companies need to venture into the industry. However, technology companies that are entering

the EV space pose long-term threats (SD 3). The impact of the collaboration is that Nissan will

attain financial sustainability in the long run. Resource sharing will also ensure that Nissan and

Honda continue to benefit from high entry barriers due to economies of scale.

Bargaining Power of Suppliers (High)

The force focuses on the ability of suppliers to dictate the prices and the quality of

products and services in the automotive industry. The force is high since major suppliers such as

battery suppliers, chip manufacturers, and software firms hold high power in the market (SD 1).

However, the collaboration between Nissan and Honda ensures that they engage in a combined

purchase of products without depending on a single supplier. This method increases bargaining

power and saves costs. Lower costs influence higher financial sustainability levels.

Bargaining Power of Buyers (High)

This force focuses on the ability of buyers to influence the prices of products sold by

Nissan. The force is high since buyers are seeking more feature-rich, low-cost EVs with rapid

charging and smart connectivity. The collaboration is beneficial since the shared software and

platform technology allow Nissan to meet consumer needs fully. The continued ability to meet

customer needs will enable the company to improve its revenues and profits after the end of the

partnership with Renault. Higher revenues and profits will influence Nissan's financial

sustainability.

Threat of Substitutes (Moderate)

This force focuses on the availability of substitute automotive products in the market.

Substitute products are cars and software made by other companies that operate in the global

automotive industry. This force is considered moderate since other companies manufacture

similar cars and software. There are also alternative means of transport, including public

transport and ride-sharing. The impact of the collaboration is that the partnership will enable

Nissan to produce cutting-edge EVs with improved range and innovative features (SD 3). This

mechanism will make EV ownership increasingly attractive and increase the number of units of

these vehicles sold by Nissan. An increase in the units sold by Nissan will improve the profits

and sustainability levels of the company.

Industry Rivalry (Very High)

This force focuses on the competition levels in the automotive industry. The force is high

since there are many existing competitors and others seeking to join. However, Honda and

Nissan are Japan's second and third greatest automakers (SD 2). The impact of the collaboration

on Nissan is that sharing development costs and accelerating innovation enables Nissan to gain a

competitive strength without incurring full R&D expense alone. Lower expenses mean that

Nissan is on the path towards higher levels of profitability and financial sustainability. In

summary, this tool shows that the alliance between Nissan and Honda allows Nissan to counter

some external forces that influence higher levels of financial performance. The alliance

specifically allows Nissan to reduce the impact of supplier power and intense competition while

enhancing its ability to differentiate and compete. These forces, in aggregate, result in improved

profitability.

BCG Matrix

Fig 1: BCG Matrix

The tool is used for strategic planning to manage a company's portfolio of products. It

classifies products using market growth and market share. The products are classified into stars,

question marks, cash cows, and pets. For car makers such as Nissan, the BCG Matrix is a useful

tool for reviewing which segments have to be invested in further to improve the profitability and

the sustainability of the company.

Current Product Portfolio of Nissan

Cash Cows- These products have a high market share and a low rate of market growth. Nissan's

aged internal combustion engine (ICE) models dominate mature markets like Europe and North

America. These products provide consistent revenue and finance ongoing operations. However,

there are low rates of market growth for these products.

Stars-These products have a high rate of market growth and a high market share. One of the

products in this category is the electric vehicles, such as the Nissan Ariya. There is a growing

demand and regulatory pressure toward electric vehicles, and this pressure can become a long-

term driver for profits for Nissan.

Question Marks-These are products with a low market share and a high market growth rate.

Some of Nissan's products that are question marks include new technologies such as autonomous

driving systems and better software platforms.

Dogs-These products have a low market share and a low market growth rate. Certain

underperforming products that fit into this category include minivans or aging models with

declining sales. They may not be worth further investment unless repositioned or renovated.

The Impact of Collaboration with Honda on Portfolio Dynamics

Several positive implications can be associated with the collaboration between Nissan and

Honda.

EVs Turn Question Marks into Stars-The first positive implication is that the joint

development accelerates innovation and shortens time-to-market for electric vehicles made by

Nissan. The rationale is that the two companies are the second and third-largest in Japan (SD2).

This move ensures that the EVs gain stronger market positions, leading to higher revenue for

Nissan and higher profitability.

Cost Savings in Cash Cows-The collaboration between the companies helps in reducing the

costs involved in the ICE vehicle cost of production. This move increases profitability and

guarantees cash generation during the phase of electrification transition (SD 3). This move will

increase the financial sustainability levels of Nissan.

Software as a Star-The software being developed by Nissan in collaboration with Honda

unlocks a new, high-margin growth path. Subscription services and over-the-air updates can

create recurring revenue streams, leading to higher sustainability.

The tool shows that this strategic partnership enables Nissan to rebalance its product mix

by fueling EV and software expansion while maintaining profitability from core products. The

partnership thus encourages a better-balanced and diversified portfolio. In addition, the

realignment of the product portfolio will influence a higher financial performance by the

company.

Profitability Ratios

Net profit Margin- This ratio focuses on the ability of Nissan and Honda to make profits

separately. The analysis of the change in profitability will help evaluate how the collaboration

may impact Nissan's profitability and sustainability.

Table 1: Profitability Ratios

The provided data emphasizes Nissan's and Honda's 2023 and 2024 net profit margin

calculations (SD 5). For Nissan, the calculation shows the dramatic decline in its net profit

margin from 3.36% in 2023 to -5.31% in 2024 (SD 4). This drop represents the steep drop in its

profitability. This negative margin shows that Nissan incurred losses in 2024, with its expenses

exceeding its revenues. The computation shows that Honda made a more stable and positive

performance. Its net profit margin increased modestly from 4.24% in 2023 to 5.78% in 2024,

Nissan

(Billion

Yen)

Formula

2023 computation

2024 computation

Change

between

2023

and

2024

Net

profit

margin

(net profit/

sales)*100%

(426.6/12685.7)*100%

=3.36%

(-670.9/12633.2)*100%

=-5.31%

Negativ

Honda

(Millio

n Yen)

Net

profit

margin

(net profit/

sales)*100%

(717909/16907725)*100

=4.24%

(1182590/20428802)*100

=5.78%

Positive

showing better cost management and revenue generation (SD 5). Honda's continued profitability

underscores its healthier financial position compared to Nissan during this period. Therefore, the

collaboration will enable Nissan to benefit from Honda's financial resources. This move will

improve Nissan's profitability and sustainability.

Therefore, the Nissan-Honda alliance has the potential to be a profitability game-changer

for Nissan. The sharing of resources will ensure that Nissan will reduce research and

development expenditures. Sharing resources in EVs will enable Nissan to enjoy economies of

scale. This will reduce the production costs.

Conclusion

This assessment shows that Nissan's strategic partnership with Honda presents a sound

opportunity for Nissan to improve its profitability. The analysis used the key concept of

sustainability to evaluate how this collaboration will improve the sustainability of Nissan. BCG

matrix showed that the joint development can accelerate the transition of EVs and software from

"Question Marks" to "Stars. This move will also maintain cash flow from legacy ICE vehicles as

"Cash Cows." The Porter's Five Forces analysis highlights how shared resources reduce supplier

power and strengthen the competitive positioning of Nissan in a highly contested market. In

addition, profitability analysis shows that the collaboration will reduce the costs used by Nissan

in its operations. This move will help Nissan reverse declining net profit margins. Therefore, the

alliance with Honda can be Nissan's game-changer to reclaim competitiveness and boost growth.

This move will therefore enable Nissan to achieve sustainable profitability in the evolving auto

business.

 13
References 
Daisuke, M. (2024). Honda, Nissan to collaborate on EV software as they chase rivals. https://
www.asahi.com/ajw/articles/
15373199#:~:text=%E2%80%9CWe%20cannot%20survive%20if%20we,of%20gasoline
%20vehicles%20and%20EVs. 
Honda Annual Report 2024. https://global.honda/en/sustainability/integratedreport/pdf/
Honda_Report_2024-en-all.pdf?
utm_source=top&utm_medium=link&utm_campaign=integratedreport2024&utm_conten
t=Honda_Report_2024-en-all_category 
Japan Today (2025). Honda, Nissan in talks on sharing common auto software. https://
japantoday.com/category/business/honda-nissan-in-talks-on-sharing-common-auto-
software 
Nissan Motor Corporation Annual Report 2024. https://global.nissannews.com/en/releases/
250513-01-e 
Reuters (2024). Japan's Nissan, Honda to jointly research software, start talks with Mitsubishi. 
https://www.reuters.com/business/autos-transportation/japans-nissan-honda-research-
software-platform-together-2024-08-01/ 

Supporting Documents

Supporting Document 1: Japan Today (2025). Honda, Nissan in talks on sharing common auto

software. https://japantoday.com/category/business/honda-nissan-in-talks-on-sharing-common-

auto-software

Honda Motor Co and Nissan Motor Co are in talks on sharing common basic software for

advanced vehicle control in a bid to catch up with U.S. and Chinese rivals, sources familiar with

the matter said Monday.

The two automakers aim to launch vehicles to be operated by the new software in the latter half

of the decade, as competition for software-defined vehicles or SDVs is expected to intensify in

the global auto market.

SDVs require vast amounts of data for their development and operation, giving carmakers that

collaborate significant advantages in accelerating development and reducing costs.

U.S. electric vehicle manufacturer Tesla Inc, as well as some Chinese automakers, are already

leading the SDV race. Toyota Motor Corp and Mazda Motor Corp are also considering using

common software.

The Honda-Nissan talks on software are the latest example of possible joint operations between

the two carmakers, after they said in February they had terminated merger talks following

Nissan's rejection of a proposal to become a wholly owned subsidiary of Honda.

Among other potential tie-ups, Nissan is in the final stages of talks to supply its U.S.-made

pickup trucks to Honda, people close to the matter said earlier.

The two carmakers are also considering sharing chips, motors, and other vehicle components.

The two automakers have been looking for cooperation in software development and battery

charging services for EVs since they agreed in March 2024 to start a feasibility study for such a

strategic partnership.

Still, Honda said earlier it would roll out EV models equipped with its own software, starting

from 2026.

Supporting Document 2: Reuters (2024). Japan's Nissan, Honda to jointly research software, start

talks with Mitsubishi. https://www.reuters.com/business/autos-transportation/japans-nissan-

honda-research-software-platform-together-2024-08-01/

TOKYO, Aug 1 (Reuters) - Japanese automakers Nissan Motor (7201.T), opens new tab and

Honda Motor (7267.T), opens new tab have agreed to conduct joint research into technologies

for a next-generation software platform, they said in a joint statement on Thursday.

The companies also signed a memorandum of understanding to deepen the strategic

partnership they announced in March, pledging to cooperate in areas such as batteries, e-axles

and vehicle complementation.

The automakers signed another memorandum of understanding with Mitsubishi

Motors (7211.T), opens new tab, which is 34% owned by Nissan, to discuss a framework to

collaborate on vehicle electrification based on Honda's and Nissan's agreement from March, they

said in a separate statement.

Nissan and Honda aim to conduct the basic research into technologies for the next-generation

software platform in about a year, they said in their joint statement.

The push comes as both companies, Japan's third and second biggest automakers after Toyota,

still have to significantly step up electric-vehicle sales and have been losing share in key market

China where both have made large investments.

The pair, which had combined global sales of 7.4 million vehicles in 2023, face growing

competition from legacy global brands that have rolled out EVs at a swifter pace and players

such as Tesla (TSLA.O), opens new tab and China's BYD (002594.SZ), opens new tab, .

Nissan and Honda will benefit from the cooperation on software as factors such as the ability to

process data and the number of engineers working in the area boost competitiveness, Honda

CEO Toshihiro Mibe said.

They will seek to standardise the specifications of EV battery cell modules from a mid- to long-

term perspective, aiming to make it possible to use the batteries they plan to procure in vehicles

from both companies, they said.

The companies said they will look into whether lithium-ion EV batteries made by L-H Battery

Company, a joint venture between Honda and South Korea's LG Energy Solution (373220.KS),

opens new tab, can be supplied to Nissan in North America from 2028 or later.

Supporting Document 3: Daisuke, M. (2024). Honda, Nissan to collaborate on EV software as

they chase rivals. https://www.asahi.com/ajw/articles/

15373199#:~:text=%E2%80%9CWe%20cannot%20survive%20if%20we,of%20gasoline%20veh

icles%20and%20EVs.

Nissan Motor Co. President Makoto Uchida, left, and Honda Motor Co. President Toshihiro

Mibe shake hands on Aug. 1 at a news conference held in Tokyo. (Koichi Ueda)

With domestic automakers lagging in the global electric vehicle race, Honda Motor Co. and

Nissan Motor Co. announced on Aug. 1 a partnership to jointly develop software-related

technologies for EVs.

Mitsubishi Motors Corp., a Nissan affiliate, also agreed on the same day to explore joining the

collaboration.

"We cannot survive if we don't respond to the dynamic structural changes in the industry," said

Honda President Toshihiro Mibe. "We will execute our plans speedily."

Nissan CEO Makoto Uchida added, "With our potential collaboration with Mitsubishi, we will

explore further synergies."

The companies plan to conduct joint research for a year and aim to commercialize the results by

2030.

The partnership will focus on five key areas including fundamental research for Software-

Defined Vehicles (SDV), battery development and standardization of the e-axle, a drive unit.

SDVs are next-generation vehicles that can be regularly updated with new features and functions

through software.

With Tesla and China's BYD Co. leading the growing global EV market, Japanese automakers,

traditionally focused on gasoline and hybrid vehicles, are falling behind.

By joining forces, Honda and Nissan hope to reduce development costs of EVs, which are

estimated to be several hundred billion yen.

They plan to standardize main components, particularly batteries, which account for a large

portion of EV production costs.

Other plans include the mutual supply of gasoline vehicles and EVs.

Supporting Document 4: Nissan Motor Corporation Annual Report 2024. https://

global.nissannews.com/en/releases/250513-01-e

Supporting Document 5: Honda Annual Report 2024. https://global.honda/en/sustainability/

integratedreport/pdf/Honda_Report_2024-en-all.pdf?

utm_source=top&utm_medium=link&utm_campaign=integratedreport2024&utm_content=Hond

a_Report_2024-en-all_category

August 14, 2025

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Academic level:

High school

Type of paper:

IB Internal Assessment

Discipline:

Business and management

Citation:

APA

Pages:

7 (1850 words)

Spacing:

Double