Nissan Shares Plunge as Foxconn Clarifies Partnership Intentions

Nissan Motor Co. (TYO:7201) saw its shares drop 6.8% to 412.4 yen on Wednesday after Foxconn (SS:601138) Chairman Young Liu clarified that the electronics giant was pursuing a partnership with Nissan, not ownership.

Liu emphasized that Foxconn, formally known as Hon Hai Precision Industry Co Ltd (TW:2317), was not seeking to acquire Nissan (OTC:NSANY) but was open to collaboration. He also mentioned discussions with Renault SA (EPA:RENA), which holds a stake in Nissan, according to Reuters.

The clarification comes amid reports that Nissan recently withdrew from a potential merger with Honda (NYSE:HMC), reportedly to avoid becoming a subsidiary. Earlier speculation suggested Foxconn might take a stake in Nissan after the Honda deal fell through.

Foxconn, the world’s largest contract electronics manufacturer and a key supplier to Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA), has shown interest in Nissan’s expertise in electric vehicle (EV) production. A partnership could help Foxconn strengthen its push into the EV sector while offering Nissan a potential lifeline as it struggles with declining global sales and mounting competition from Chinese automakers.

Nissan has faced challenges in key markets, with demand for traditional automobiles weakening amid the growing dominance of Chinese EV makers. A potential Foxconn collaboration could provide the Japanese automaker with resources and technology to regain a competitive edge in the EV market.

While Foxconn has previously explored automotive partnerships, its latest approach suggests a strategic alliance rather than a direct acquisition. Investors reacted negatively to the news, sending Nissan’s stock tumbling in Tokyo trading.