Honda and Nissan’s Merger Talks Ended After Dispute on Hybrid Technology

Honda and Nissan officially ended their merger discussions two months after initially agreeing to explore the possibility of creating a new holding company by 2026. While it was already known that Honda wanted to make Nissan a subsidiary, reports reveal that another major disagreement led to the breakdown of talks.

According to The Japan News, Honda asked Nissan to abandon its e-Power hybrid technology in favor of Honda’s hybrid system. This was strongly rejected by Nissan, straining the relationship between the two automakers. Despite the merger being canceled, both companies have stated that they will continue working together on electrified vehicles in the future.

Nissan remains committed to its e-Power hybrid technology and is already developing its third-generation system. According to Nissan’s recent product roadmap, the new e-Power system will be 20% more efficient than the original version launched in 2016 and 15% more fuel-efficient on highways compared to the current generation. Nissan also plans to reduce the production costs of e-Power by 20%, making it more affordable for future models.

Nissan is preparing to introduce e-Power technology to the U.S. market with the launch of the Rogue e-Power hybrid SUV in FY2026 (April 2026 – March 2027). Additionally, a plug-in hybrid version of the Rogue is set to debut earlier, in FY2025 (April 2025 – March 2026). Nissan’s Qashqai crossover and a new minivan in Japan will also adopt the third-generation e-Power system between FY2025 and FY2026.

Unlike traditional hybrid systems, Nissan’s e-Power setup does not mechanically connect the internal combustion engine (ICE) to the wheels. Instead, the gas engine acts as a generator, charging the battery, which then powers the electric motor. This design allows e-Power vehicles to offer an EV-like driving experience while still using gasoline.

Since launching e-Power with the Nissan Note, the system has been adopted by several models, including the Kicks, Qashqai, X-Trail, and Sylphy sedan in China. Other automakers have explored similar systems, such as Mazda’s rotary engine-based hybrid for the MX-30.

Meanwhile, Honda is also improving its hybrid technology with its new e:HEV system, featuring 1.5- and 2.0-liter gasoline direct-injection engines that run on the Atkinson cycle. Honda claims that its new hybrid technology will be 10% more fuel-efficient and will make hybrid vehicles 90 KG lighter than the current models. The company also aims to cut hybrid production costs by 50% by 2027, compared to models launched in 2018.

Despite their failed merger, Honda and Nissan continue to develop their own hybrid and electrified technologies, ensuring competition and innovation remain strong in the industry.