Nissan looks for partnerships to cut electric vehicle costs

Nissan plans to slash the cost of manufacturing its electric vehicles by 30 per cent through new partnerships and manufacturing methods, as the Japanese carmaker responds to the rising threat from Chinese rivals.

Nissan, which has a long-standing alliance with France’s Renault and a partnership with Honda that was announced last week, has wrestled with flagging sales in China as the automotive industry struggles to build profitable battery-powered vehicles at affordable prices.

Following months of delay, Nissan released a business plan on Monday addressing how a carmaker of its size — with relatively small annual sales of fewer than 4mn vehicles — would finance the costs of new technology development and survive the transition to electric cars. The strategy aims to lift annual sales by 1mn units by the end of its 2026 fiscal year, which ends in March 2027.

Under the plan, Nissan will launch 30 models over the next three years, about half of which will be electric vehicles, plug-in hybrid cars and other electrified versions. In China, it plans to launch eight such “new energy” vehicles and begin exporting cars made in the country from next year. In the US, it aims to sell about 165,000 more vehicles in fiscal 2026 compared with 2023, while it wants India to become a pivotal hub for car exports.

The carmaker will also aim to launch an EV powered by emerging solid-state-battery technology in fiscal 2028.

Despite some recovery in financial performance, the group has faced criticism from investors for failing to address the rapid transition to EVs in China. In the US, Nissan has also failed to benefit from a boom in hybrid vehicle sales because of a lack of offerings in this category.

“We cannot continue [growing] with the current way of doing things. It’s important to have the courage to transform the company,” Nissan’s chief executive Makoto Uchida said in an interview. “We cannot do this alone.”

The new business strategy comes after Nissan surprised investors by striking a partnership with its historic rival Honda to develop EVs in a bid to address the coming wave of high-tech, low-cost models from China. 

The group will maintain its long-term alliance with Renault and Mitsubishi Motors in certain markets such as Europe, south-east Asia and Latin America. But investors have questioned the future of the trilateral partnership after the French carmaker recently cut its 43 per cent stake in Nissan to 15 per cent.

Uchida said on Monday that the company would explore new partners in Japan and the US as it looked to remain a major global player. “We need to have the flexibility to adjust ourselves . . . to anything that could be happening in the future,” he said.

Nissan plans to make EVs more affordable but still profitable by developing five models together in a group, integrating components, cutting procurement costs and advancing battery technology. It wants to make the cost of producing EVs the same as for traditional combustion engine vehicles by fiscal 2030. 

“Nissan took a long time to develop this plan, was late in recognising the renewed popularity of hybrids and was well challenged in fending off very nimble new competitors,” said CLSA analyst Christopher Richter. “Nissan needs to be prepared to be more adaptable and nimble as disruption has become the watchword of the industry.”