A high-level Japanese group is seeking investment from EV maker Tesla (TSLA) to save Nissan Motor (JP:7201) (NSANY) after its deal with Honda Motor (HMC) (JP:7267) flopped. The news was first reported by the Financial Times, citing sources familiar with the matter. Nissan’s Japan-listed shares jumped over 11% in intra-day trading today on the news.
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The group includes ex-Prime Minister Yoshihide Suga and his former aide Hiroto Izumi. It is being led by Tesla’s ex-board member Hiro Mizuno. Nissan’s board members are also aware of the plan, the report added. There have been no official comments from any of the related parties on the matter yet.
Here’s Why Tesla Could be Interested in a Deal
The group hopes that billionaire investor and CEO Elon Musk would see the potential value of utilizing Nissan’s idled production capacity in the U.S. as a catalyst for the investment. Tesla could become a strategic investor and help Nissan in expanding its domestic manufacturing capabilities in the U.S. Nissan’s two plants at Tennessee and Mississippi boast a combined annual production capacity of 1 million units. However, in 2024, the plants produced only 525,000 autos. The report also noted that Tesla is interested in acquiring Nissan’s U.S. facilities.
Nissan is struggling with declining demand for its autos amid heated competition. Additionally, Trump’s proposed 25% tariffs on auto imports could have a massive impact on the automaker. Rating agency Moody’s also downgraded Nissan’s credit rating to junk (Ba1) this morning, citing its weak profitability and diminishing demand for its aging auto portfolio. Moody’s also noted that it is not confident of Nissan generating positive free cash flows anytime soon, even if it undergoes a strategic restructuring of costs and launches new models.
Is Tesla a Buy, Hold, or Sell?
Analysts prefer to remain on the sidelines on Tesla stock currently. On TipRanks, TSLA stock has a Hold consensus rating based on 13 Buys, 12 Holds, and 10 Sell ratings. The average Tesla price target of $351.38 implies that the stock is almost fully valued at current levels. In the past year, TSLA stock has gained nearly 92%.
