• A high-level Japanese group is pursuing Tesla's investment in Nissan following the breakdown of merger discussions with Honda.
• Shares of Nissan surged nearly 12% on the prospect of a strategic partnership with Tesla.
• Elon Musk has downplayed Tesla's interest, indicating that their existing production lines are unique and sufficient.

The plans for Tesla's potential investment in Nissan have gained traction following the recent collapse of merger talks with Honda. A report by the Financial Times indicated that a consortium led by former Tesla board member Hiro Mizuno, with backing from former Prime Minister Yoshihide Suga, is advocating for this strategic move. The group believes that Tesla might be interested in acquiring Nissan's manufacturing plants in the United States.

After the news broke, Nissan's stock saw an impressive jump of nearly 12%, reflecting investor optimism. However, amidst this positive market reaction, Elon Musk appeared to temper expectations about Tesla's intentions regarding Nissan, stating on X that Tesla’s factory is “the product” and implying that an acquisition of Nissan’s facilities might not align with Tesla’s strategy.

The immediate context for these discussions stems from Nissan's deteriorating financial position, which has seen its credit rating downgraded to junk status by Moody's. This follows a 93% plunge in profits, signaling the urgent need for new investment opportunities as competition intensifies in the electric vehicle market. Reports suggest that Taiwanese electronics giant Foxconn may also play a role in these discussions, potentially participating as a minority investor in a consortium that includes Tesla.

Notably, the brake on merger discussions between Nissan and Honda emerged due to disagreements over the structure of the deal. As Nissan faces significant operational hurdles, securing Tesla as a strategic investor might provide the necessary boost to revive its manufacturing capabilities and financial health, although Elon Musk’s apparent reluctance raises questions about the feasibility of this potential partnership.

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