Nissan and Honda, two rival Japanese car manufacturers, are exploring a potential partnership for the development of next-generation electric vehicles. The companies have announced a "memorandum of understanding," initiating a feasibility study for a strategic collaboration in vehicle electrification and intelligence, as stated in a joint media release.

Reports from Nikkei Asia suggest that Nissan is proposing the creation of a shared electric powertrain, or 'e-axle,' aimed at reducing costs for both manufacturers in future electric vehicle models. Additionally, there's interest in jointly developing an electric vehicle platform to compete with lower-cost Chinese competitors like BYD, although Honda's stance on Nissan's proposal remains uncertain.

BYD's significant cost advantage, driven by its in-house manufacturing of batteries and other crucial components, has led to substantial sales growth globally, including in Australia.

This potential partnership between Honda and Nissan comes after the cancellation of a previous multi-billion-dollar plan between Honda and General Motors to develop an affordable electric car. Previously, GM and Honda had announced plans to collaborate on an electric vehicle priced below $30,000 to challenge Tesla's dominance in the market.

According to Reuters, Honda and Nissan are considering leveraging each other's resources more effectively to compete on cost, particularly targeting the expanding market for Chinese electric cars in Asia, Australia, and New Zealand.

As of now, Honda doesn't offer electric vehicles in the Australian market, while Nissan has been selling the Leaf electric vehicle locally for the past 12 years. Nissan is also preparing to introduce the Ariya electric SUV to the Australian market, although specific launch timelines haven't been disclosed by the brand's Australian representatives.