Nissan is seeking a new partner as it prepares to end negotiations to form a joint holding company with Honda, according to people familiar with the matter.

The fresh ally would ideally be from the technology sector and be based in the U.S., the people said, asking not to be identified because the information isn’t public. Although its sales are slowing globally, North America remains Nissan’s most important market, as the wider shift toward electrification and automation has pushed all carmakers to seek alliances with high-tech industries. 

Nissan shares jumped as much as 8.7% in afternoon trading in Tokyo on February 6. A Nissan spokesperson declined to comment, adding that any details concerning talks with Honda would be announced as planned around mid-February.

Walking away from the tie-up with Honda is a huge gamble for Nissan, whose outdated product lineup has forced it to discount heavily, destroying its bottom line. The automaker, which will report third-quarter earnings the week of February 10, announced a 94% drop in net income for the first half of the fiscal year, and has said it will need to dismiss 9,000 workers and cut a fifth of its manufacturing capacity.

That precarious financial situation isn’t likely to appeal to many would-be suitors. If Nissan doesn’t find a partner to help put it back on a stronger footing after the partial unwinding of its complex 25-year strategic partnership with Renault SA, it may need a rescue like it did with the French automaker.

Nissan and Honda confirmed on February 5 that they’re still discussing various options, including the possibility of ending deal talks. Honda had floated the idea of acquiring Nissan and making it a wholly owned subsidiary, which met strong opposition within the smaller Japanese car company, one of the people said. The level of investment was also a sticking point, they added. 

Honda had also made the restructuring of Nissan’s operations a prerequisite for any transaction. But apart from cutting some jobs and trimming output, Nissan hasn’t done a lot. It isn’t planning on closing any factories, for example, which likely irked Honda, considering it was looking for wholesale change.

Ending the exclusive discussions with Honda, meanwhile, would let either party walk away without having to pay a hefty cancellation fee of ¥100 billion ($657 million), according to the companies’ memorandum of understanding on December 23. 

Nissan’s board is pushing CEO Makoto Uchida and other senior managers to develop a more comprehensive restructuring plan in parallel to discussions with any potential new partner, the people said. 

The goal is to come up with a much deeper revamp in time for February 13, when the maker of Altimas and Pathfinders is scheduled to report quarterly results. That’s also when the board will meet to formalize its decision, one person said. Honda reports its third-quarter earnings that day too.

Nissan has struggled to regain its footing since the 2018 arrest and purge of former Chairman Carlos Ghosn on charges of underreporting compensation. That upended Nissan’s alliance with Renault, and the subsequent score-settling fueled an exodus of top management, leaving less bandwidth to focus on the actual business of selling cars.

The scope of Nissan’s financial crisis became obvious to the broader public in November 2024, when the automaker also slashed its annual profit guidance by 70%. 

Any new restructuring plans must go beyond those figures. “Further earnings deterioration is possible at Nissan,” Citigroup Inc. analyst Arifumi Yoshida said. “Additional restructuring measures are vital.”

Despite its woes, Nissan’s vast manufacturing operations and household brand name remain a draw.

Hon Hai Precision Industry Co. — the maker of iPhones known as Foxconn — is trying to establish a foothold in outsourced manufacturing of electric vehicles, and approached Nissan about acquiring a stake in the company in December. Ultimately, it put its interest on hold when it became clear that the Japanese automaker was in negotiations for a potential combination with Honda. 

But the electronics contract manufacturer didn’t give up completely, people familiar with the matter said, preferring to see if the two could make legitimate progress toward a deal before deciding on its next move.