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Nissan accelerating rollout of electric vehicles in China: report - Fox Business

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BEIJING - Nissan Motor is accelerating the rollout of electric vehicles in China under its main brand and its local, no-frills Venucia marque as it overhauls its strategy in the world’s biggest auto market, four sources told Reuters.

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Besides the focus on green vehicles, the plan involves using more locally made parts and technologies to reduce costs and help the struggling Japanese carmaker compete better with lower-cost Chinese firms and major global rivals, the sources said.

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The China strategy is a key pillar of Nissan’s turnaround, which involves focusing on producing profitable cars for China, Japan and the United States, rather than chasing all-out global growth as it did under disgraced former boss Carlos Ghosn.

“Before we were saying global, global, global, and China was just part of that strategy,” one of the four people familiar with the plans told Reuters.

“With regionalisation now replacing globalisation, we have to improve the cost competitiveness of all the components and technologies that go into a car by going totally local,” he said.

Nissan Motor is accelerating the rollout of electric vehicles in China under its main brand and its local, no-frills Venucia marque as it overhauls its strategy in the world’s biggest auto market.

Both the Nissan board and the board of its China joint venture Dongfeng Motor Company have backed the plan and some elements of the new strategy will be unveiled at the Shanghai auto show in April, the sources said.

Nissan plans to launch three cars in China this year: the new all-electric Ariya crossover, a significant redesign of its X-Trail sport utility vehicle (SUV) and a hybrid Sylphy compact car using its e-Power technology, the sources said.

At least one new Nissan car will hit the Chinese market each year through 2025, with most either fully electric or hybrids equipped with autonomous and smart driving technology, the sources said. One is likely to be an e-Power X-Trail.CORONAVIRUS PANDEMIC DRIVES CAR BUYERS ONLINE

Two of the sources said the plan also involves turning Venucia more into a brand for affordable electric vehicles (EVs), though details are still being worked out. The idea is to price new Venucia EVs well below its current cheapest EV - the e30 mini car - which starts at 61,800 yuan ($9,540).

All four sources work for Nissan and spoke on condition of anonymity because they are not authorised to speak to reporters.

Nissan declined to comment on its future product strategy.

“China is a core market for Nissan and Nissan is getting prepared to launch a slew of technologies including e-Power technology to fulfil customers’ aspirations,” a Nissan spokesman said. He also confirmed the Ariya would be launched in 2021.

Despite being one of the world’s first automakers to fully embrace fully electric cars with its best-selling Leaf, Nissan has fallen behind Toyota and Honda, analysts said. Both launched a slew of new hybrids in China in 2019 and 2020 which has helped boost their sales.

“Nissan has nothing to show off in terms of green cars in China today,” said Yale Zhang, head of consultancy Automotive Foresight in Shanghai. “That’s hurting their image and, most importantly, sales.” Nissan’s new China strategy is also a response to growing competition from price-competitive Chinese automakers such as Geely Automobile, GAC Motor, and BYD, two of the sources said.

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One of the sources said a new focus on “China-specific” cars designed to appeal to local tastes underpinned Nissan’s more decisive turn towards electrified models. That should mean bolder grilles, sharp-looking headlamps and tail lights as well as richer, softer and more sumptuous vehicle interiors.

Many local brands are now producing better-quality cars and that’s putting pressure on Nissan’s mainstream cars, as well as vehicles produced by other global automakers.

The most critical part of Nissan’s China-specific strategy, however, is to make cars with more parts and technologies procured within the country to slash costs.

After posting its first loss in 11 years, Nissan is scrambling to slash its production capacity and models by about a fifth and to cut fixed costs by 300 billion yen ($2.9 billion) over three years.

Nissan expects to post a record operating loss of 340 billion yen in the year ending March 31.

Two of the sources said there wasn’t necessarily a cost-cutting target for the China initiative. However, Nissan is worried about the potential hit to profitability from increasingly stringent emissions and fuel-economy rules, as well as a likely rise in the cost of materials such as steel, other metals and semiconductors, they said.

Under the new China plan, parts engineered and procured locally should go well beyond bumpers, seats and lamps to include more complex technologies such as sensors and electric power inverters, three of the sources said.

Batteries for Nissan’s e-Power models, for example, will be locally developed and sourced from China’s Sunwoda Electric Vehicle Battery Co.

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Nissan’s new plan is modest in terms of volume growth. It is simply aiming to outpace the overall Chinese market for cars and light commercial vehicles, which Nissan expects to grow by about 10% to 25 million vehicles by 2025, one source said.

Nissan’s previous “Triple One” China plan aimed to boost annual sales to 2.6 million cars by 2022 but the COVID-19 pandemic derailed it. Nissan sold 1.46 million cars last year, down from 1.56 million in 2018 when that plan was unveiled.

While Nissan’s performance in China last year was broadly in line with an overall 6% decline in passenger car sales due to the coronavirus, its Venucia brand fared particularly badly. Established in 2012 to compete with local brands making cheap, gasoline-fueled cars, Venucia’s sales peaked in 2017 at 143,206 before sliding to 79,000 last year. The plan is to relaunch Venucia more as a brand for affordable EVs though it won’t be going fully electric for now, two sources said.

Carmakers in China need to make enough so-called New Energy Vehicles to win green-car credits which then offset negative points from their production of combustion engine vehicles.

Nissan looks set to fall short of credits so it would either have to buy them from rivals, or step up its EV production. As buying credits would eat into profitability, it is favouring the second strategy, one of the sources said.

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Cheaper EVs made locally by global rivals such as General Motors through joint ventures have also proved to be a success story with customers, especially in big cities.

Launched in July, GM’s tiny Wuling MINI EV has already become China’s best selling electric vehicle, knocking Tesla’s Model 3 sedan off its perch.

“We don’t have enough electric cars in China. The new plan for Venucia is all about changing that more decisively,” said one of the sources familiar with Nissan’s plans.

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