What Is the Fate of a People Who Fail to Reflect?
How long will we continue following the same formula that leads to the decline of Japanese industry before we finally learn? The deterioration of Japanese corporate leadership seems likely to bring about a deeply tragic future for the Japanese people. We’re seeing the repeated “Defeat of Made in Japan,” and companies like Nissan—despite having no cars that sell—still cling to their pride. If there is any last-resort measure for Nissan to survive…
Perhaps the only remaining option is to hand over their production equipment—for free—to rapidly growing Chinese firms like BYD, Huawei, or Xiaomi, who are hungry for manufacturing capacity. Even selling themselves to latecomers in the SDV field like Foxconn may not ensure survival.
“The current state of Japan’s automotive industry closely resembles that of the electronics sector’s decline 20 years ago.” This same formula of industrial failure has played out across numerous sectors in Japan. How many times must we fail before we realize the pattern? What is the fate of a people who do not learn from their mistakes?
■ “Nissan has no cars that sell right now.”
This statement will likely ripple throughout the entire Japanese automotive industry.
Automakers must invest heavily in rapid transitions to BEVs and SDVs (Software-Defined Vehicles). But it’s already too late. In the world of AI, the advantage of being a first mover is immense. With China’s deep-seek distillation technologies and open-sourcing, AI will evolve at lightning speed, surpassing emergent points and advancing terrifyingly between 2025 and 2027.
Nissan has production capacity for approximately 5 million units annually, but sales are only about 3.3 million. Even now, its operating rate is just above 60%, and with the brand’s value already significantly damaged, future sales will likely decline even further. A restructuring plan based on an annual output of around 2 million units is necessary to remain profitable. Failure to scale back excess production capacity—whether it’s employees or factory assets—will only make survival harder.
If Nissan attempts restructuring on its own, it may be forced into a shrinking equilibrium. In that case, including suppliers, we could see a massive restructuring affecting hundreds of thousands of people (60,000 employees plus subcontractor reductions by 50%). I worry this may become a serious societal issue.
Honda Only Makes Money from Motorcycles
Honda is also a latecomer to SDVs. Its newly launched SUV in China hit the market just a few days ago, but it is priced 20–40% higher than competitors despite lacking in standard equipment, underperforming in specs, and having uninspiring design. Its autonomous driving tech is inferior to rivals, and its warranty period is only about 60% of what rising Chinese firms like BYD and Xiaomi offer.
Toyota’s “bZ3X,” a blatant Chinese copy, is still over 2 million yen (around 40%) cheaper than Honda’s model. What kind of management thinks launching an obviously uncompetitive car is acceptable? It’s baffling.
Sony Honda Mobility’s first EV, the AFEELA 1, priced from around 14.2 million yen, is another tone-deaf product unlikely to sell. If they truly wanted it to succeed, it would need at least Level 3 autonomous driving at half the price. The era has changed, and they haven’t kept up.
Toyota Has Launched a BEV in China at Half to One-Third the Price of Its Japanese Counterpart (Around \2.2 Million)
The global vehicle industry is undoubtedly heading toward a new era where prices are cut in half. Are there any Japanese companies that can produce the same product at half the price within a year?
Why Did Japan’s Electronics Industry Decline?
Survival now depends on SDV transformation. This means the auto industry is becoming a digital business focused on software and semiconductors.
Software development costs are fixed, and the more units you produce, the greater your profit margins due to economies of scale—something all executives should understand.
Moreover, software is embedded in semiconductors, which are also produced through massive capital-intensive operations, again benefitting from scale. This leads to a market where only top-tier companies—those with the best engineers and the boldest investments—can dominate profits.
Japanese electronics companies declined because their leaders avoided challenges and prioritized self-preservation. They lost the scale game and saw their once world-class hardware businesses dwindle.
Fundamentally, the Japanese Multi-Layered Subcontracting Business Model No Longer Works
Today’s successful companies do most of their development in-house and move at lightning speed. They delegate authority, make rapid decisions, and act immediately. And crucially, they spare no expense in hiring genius-level talent. In Japan, no company would ever hire a young genius with a \100 million annual salary as a regular employee.
Take Tom Zhu (Zhu Xiaotong), a Chinese national who joined Tesla in 2014. After just four years at the company, he was entrusted with launching the Shanghai Gigafactory. From breaking ground in 2019, the factory was completed in under a year. He is now head of Tesla’s manufacturing and serves as Elon Musk’s second-in-command, managing all Chinese operations.
At rising new-economy companies, software engineers often earn over \50 million annually, even as new hires. Those with outstanding ability can earn over \100 million, along with Tesla stock options.
Tesla’s Cortex data center combines NVIDIA GPUs and Tesla’s proprietary AI hardware, equipped with more than 100,000 NVIDIA H100 and H200 GPUs. Its xAI division reportedly uses over 300,000 GPU systems, working in tandem. Tesla even builds its own supercomputer, “Dojo.”
Chinese new-economy firms are following suit. BYD, originally a battery maker, now manufactures 29 BEV models, along with in-house radar and other hardware. It employs over 5,000 ADAS engineers developing its proprietary autonomous driving system, “God’s Eye,” in a full-stack approach combining hardware and software. They’ve also begun integrating DeepSeek technology.
Can Japan’s legacy corporations, still stuck in cozy, exploitative subcontracting systems, really adapt to this new era? What do you think?
Thinking Correctly Based on Accurate Information Is Essential in This Age
So let me ask you a question:
Can Nissan survive? What do you think?