Why Apple Should Buy Nissan

Nissan’s credit was downgraded to “junk” stats by ratings firm Moody’s today; that is a bad thing. The company walked away from a deal with Honda, and now Nissan is essentially an orphan, alone in a cruel world. Will the Japanese automaker fall pray to an artful dodger or, perhaps, is there a Daddy Warbucks waiting in the wings?

The list of potential suitors for Nissan has grown and, as always, your Morning Dump correspondent refuses to cede to logic or probability. Instead, I think the most appropriate home for Nissan is with Apple. I will explain why and then you can tell me I’m full of crap. It’s fine. I’m used to it.

There’s no shame in being wrong sometimes, so long as you’re willing to learn from your mistakes. Volvo made a mistake when it stopped selling its wagons in the UK and now, thankfully, Volvo is admitting it was wrong. Ford also misunderstood the EV market and is working hard to correct its course.

It’s Friday, I was going to end on the news that Carvana had a bad quarter, but I think I should leave you all with some happy news.

Apple Is A Perfectly Imperfect Match For Nissan

The Nissan news is just getting wilder with every passing day. There have been so many twists and turns that I feel like it’s easiest just to bullet-point it:

Nissan and partner Renault break up, with Renault saying it’ll eventually divest most of its shares in Nissan.
Nissan, now just aligned with Mitsubishi, admits it’s in bad shape.
Honda and Nissan announce a vague partnership.
Taiwanese company Foxconn talks to Renault about buying its shares in Nissan. The Japanese government allegedly freaks out.
Honda then announces it’ll merge with Nissan and Mitsubishi.
Per reports, Nissan, unhappy with the terms, gets cold feet. Eventually, Honda also seems to get cold feet and pushes harsher terms on Nissan.
Honda, it’s reported, maybe was more interested in Mitsubishi than Nissan.
Foxconn says it just wants to “partner” with Nissan, not take it over.

Whew, ok. We’re sort of caught up. But wait, more stuff is happening!

First, the bad news for Nissan. Somewhat predictably, ratings agency Moody’s has taken a look at Nissan’s credit and decided that none of this is good. Here’s the latest report from The Wall Street Journal:

The ratings company said Friday that it downgraded Nissan’s senior unsecured rating by one notch to Ba1 from Baa3, the lowest investment grade. Moody’s maintained its negative rating outlook.

Moody’s said the rating action reflects Nissan’s weak profitability driven by slowing demand for its aging model portfolio. A slowdown has been evident in China, but now the carmaker faces challenges in the U.S. market as well, it said.

The ratings company said the negative outlook took into account the risks associated with implementing the carmaker’s new restructuring plan.

The lowering of its credit rating will make it harder for Nissan to borrow money at good terms, though the company has about $13 billion on hand and a little less in unused credit lines if it needs quick cash.

Foxconn, who accelerated all of this with its inquiry to Renault, is now saying it’s interested in a deal with Honda and Nissan according to Nikkei Asia:

Taiwan’s electronics manufacturer Foxconn has proposed forming a partnership with Japanese automaker Honda Motor, with the aim of creating a four-company framework for cooperation that would include Nissan Motor and its affiliate Mitsubishi Motors, according to a source familiar with the matter.

Foxconn had been seeking a partnership with Nissan to strengthen its electric vehicle business before Honda and Nissan announced they were looking at integrating their businesses. While those merger talks terminated last week, the two Japanese companies are expected to continue their business partnership.

Through partnering with Honda, Foxconn aims to form a broader framework for cooperation to compete with Tesla of the U.S. and Chinese EV makers.

There’s something for everyone in this deal, right? Honda gets access to Mitsubishi, Nissan gets a lifeline, and Foxconn gets a bunch of partners to help offset the growing threat of Tesla and Chinese companies like BYD and Xiaomi. It remains highly unclear if anyone would accept this deal, but it’s a fun thought.

Since Tesla was mentioned, I should probably mention that a group of Japanese business and political leaders are trying to push Tesla to buy the company. From Reuters:

The proposal, led by former Tesla board member Hiromichi Mizuno, is being supported by ex-premier Yoshihide Suga and his former aide Hiroto Izumi, the report said, citing unnamed sources.

The group is hopeful that Tesla will become a strategic investor, since they believe it is keen to acquire Nissan’s plants in the United States, according to the report.

Could Nissan’s facility pump out Cybercabs? Maybe!

All of those are potential outcomes, though I think a better outcome for Nissan is that Apple buys it. If you remember, Apple spent billions of dollars and maybe a decade trying to make a car before giving up. Building cars sucks. Instead, Apple has shifted to trying to expand its popular Car Play infotainemtn system deeper into cars.

Apple is flush with cash, holding onto roughly $50 billion with a market cap of about $3.7 trillion. It could easily afford to buy Renault’s shares or do some kind of other stock swap to make every current Nissan shareholder quite happy. There is no question of means here. Apple could do it.

And, unlike every other non-Foxconn suitor, Apple doesn’t have a competitive portfolio of cars to compete with the automaker. Nissan, for its part, lacks a competitive software offering in the automotive space and is behind on autonomy. Honda made a deal with Sony to create the Afeela, premised on the idea that the car is less important than the software. Apple clearly believes the same thing.

Why didn’t Sony just build its own car? Because, again, building cars sucks. Apple could support Nissan’s restructuring, simplify its operations, utilize Nissan’s ability to make cars (specifically EVs, a segment where Nissan was early with the Leaf, even it’s fallen a bit behind), take advantage of its huge industrial footprint, and offer the first cars Powered By Apple.

If you think about it, Apple isn’t really a manufacturer. It’s a tech, design, and marketing company. Apple’s most important product is the iPhone and it outsources its production to other companies. Specifically, it outsources the production to Foxconn!

I’m not crazy to suggest this, I promise. From that same Reuters story:

Nissan in recent weeks has been searching for a strategic partner in the tech industry, with some board members suggesting Tesla and Apple as ideal targets, the report said.

Think about it Tim Cook!

Volvo Admits It Shouldn’t Have Cut Britain Off From Its Vital Supply Of Estates

The Volvo V60 Cross Country B5 AWD in Onyx Black — Photo credit: Volvo Cars

In spite of loving English literature (Graham Greene, Iris Murdoch, Evelyn Waugh, George Eliot), I’d never actually been to England until 2023. Then, in the span of about a year, I went to England three times!

It was great. I love English people. I love English brews. I especially love staring at all the cars we never got here in the United States. Wagons abounded, though the Brits call them “estates.” I noticed many Volvo estates, especially being used by the government as police/ems/fire vehicles. What I’d forgotten at the time was that Volvo was only selling estates to fleet users and not regular people.

Volvo! The wagon company! I’ve owned two Volvo wagons in my life and zero Volvo sedans or SUVs. Keeping wagons from Britain was a great mistake, as the company admits to Auto Express:

“When you tell a retail customer [estates] aren’t offered, they go off and buy someone else’s,” said Robert Deane, Volvo Car UK commercial operations director. Which meant a free hit for BMW, Audi, Mercedes and the UK’s biggest-selling car brand, Volkswagen, which registered 4,353 estates last year.

Volvo took the V60 and V90 (and S60 saloon) off the market in summer 2023, having seen demand dwindle to about five to 10 per cent of its total volume as more customers gravitated to SUVs.

Good on Volvo for fixing this oversight.

Ford’s Target Is BYD As Much As Tesla

It’s likely we’ll soon hear about a cheaper Tesla model, but, until one actually appears, it’s Chinese automaker BYD that is currently accepted as making the best affordable electric cars. In particular, the BYD Seagull offers about 250 miles of city range at a cost to consumers of under $10,000 in its home market. That is hard to beat.

With its Skunkworks project, Ford seems to consider BYD its target in terms of cost, according to comments from CEO Jim Farley in this Detroit Free Press report:

“We think that our battery strategy is more fit than our competitors,” Farley said at a Wall Street conference recently. “And we have understood BYDs through teardowns and future knowledge from the supply chain.”

[…]

In 2022, Ford established Skunkworks, where Farley said, “My badge does not work in that building,” alluding to the top-secret development happening there. He said Ford hired a whole new team in California, with many from competitive all-EV brands.

“They have developed a platform that we think is fully competitive with BYD,” Farley said.

What automakers learned was that merely catching up to Tesla is both difficult and expensive. Instead, Ford seems to be aiming at Tesla’s biggest competitor.

Check Out This Sweet Mitsuoka

It’s Friday! We survived most of the week and just have to make it through a few more hours to get to the weekend. Japanese car customizer Mitsuoka is now offering a new “Jade Green” color on its cars and celebrating the new shade with this gorgeous “Ryugi Wagon Adventure.”

It might look like a vintage Jaguar, but it’s actually a Toyota Corolla Fielder underneath.

Did I mention that the inside looks like they skinned a Teenage Mutant Ninja Turtle? I feel like that only adds to the charm.

When is Mitsuoka going to open up an arm in the United States?

What I’m Listening To While Writing TMD

Was “Hard Knock Life (Ghetto Anthem)” the first time you heard Jay-Z? The Annie-backed track was an unlikely hit and the video was basically on MTV nonstop back when that mattered.