BEIJING (Reuters) – Nissan Motor is accelerating the launch of electric vehicles in China with its main brand and local, no-nonsense brand Venucia, as it revises its strategy in the world’s largest auto market, four sources told Reuters. .
In addition to the focus on green vehicles, the plan calls for the use of more parts and technologies produced locally to reduce costs and help the struggling Japanese automaker better compete with low-cost Chinese companies and key global rivals, they have the sources said.
China’s strategy is a key pillar of Nissan’s turnaround, which is to focus on making profitable cars for China, Japan and the US, rather than pursuing total global growth as it did under the disgraced former boss. Carlos Ghosn.
“We used to say global, global, global and China was just part of that strategy,” one of four people familiar with the plans told Reuters.
“With regionalization replacing globalization, we need to improve the cost competitiveness of all the components and technologies that go into a car by becoming totally local,” he said.
Both Nissan’s board of directors and the board of its Chinese joint venture Dongfeng Motor Company have supported the plan, and 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 SUV, and a Sylphy hybrid compact car that uses its e-Power technology, the sources said.
At least one new Nissan car will hit the Chinese market every year through 2025, with most fully electric or hybrid equipped with autonomous and intelligent driving technology, the sources say. One is probably an e-Power X-Trail.
Two of the sources said the plan also includes turning Venucia into an affordable electric vehicle (EV) brand, though details are still being worked out. The idea is to price the new Venucia electric vehicles 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 authorized to speak to reporters.
Nissan declined to comment on its future product strategy.
“China is a key market for Nissan and Nissan is preparing to roll out a number of technologies, including e-Power technology, to meet customer aspirations,” a Nissan spokesperson said. He also confirmed that the Ariya would be launched in 2021.
Despite being one of the first automakers in the world to fully embrace all-electric cars with its best-selling Leaf, Nissan has lagged behind Toyota and Honda, analysts said. Both launched a number of new hybrids in China in 2019 and 2020, which helped boost their sales.
“Nissan has nothing to show in terms of green cars in China today,” said Yale Zhang, head of Automotive Foresight consulting in Shanghai. “This damages their image and, above all, their sales.”
Nissan’s new strategy for China 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.
One of the sources said a new focus on “China-specific” cars designed to appeal to local tastes supported Nissan’s more decisive shift towards electrified models. That should mean bolder grilles, edgy-looking headlights and taillights, and richer, softer, more sumptuous vehicle interiors.
Many local brands are now producing better quality cars, and this is putting pressure on traditional Nissan cars, as well as vehicles made by other global carmakers.
The most critical part of Nissan’s China-specific strategy, however, is to make cars with more parts and technologies purchased within the country to reduce costs.
After recording its first loss in 11 years, Nissan is struggling to cut its production capacity and models by about a fifth and to cut fixed costs by 300 billion yen ($ 2.9 billion) in 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 was not necessarily a cost reduction target for the Chinese initiative.
However, Nissan is concerned about the potential impact on profitability from increasingly stringent emissions and fuel economy regulations, as well as a likely increase in the cost of materials such as steel, other metals and semiconductors, they said.
Under the new Chinese plan, locally designed and procured parts would have to go far beyond bumpers, seats and lamps to include more complex technologies such as sensors and electrical power inverters, three of the sources said.
Batteries for Nissan’s e-Power models, for example, will be developed and purchased locally from Sunwoda Electric Vehicle Battery Co.
Nissan’s new plan is modest in terms of volume growth. It simply aims to surpass China’s overall market for cars and light commercial vehicles, which Nissan expects to grow by about 10% to 25 million vehicles by 2025, a source said.
Nissan’s previous Chinese “Triple One” plan aimed to increase 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 has fared particularly badly.
Founded in 2012 to compete with local brands that make cheap gasoline cars, Venucia’s sales peaked in 2017 at 143,206 before slipping to 79,000 last year. The plan is to re-launch Venucia more as an affordable electric vehicle brand, though it won’t be fully electric for now, two sources said.
Carmakers in China need to do enough so-called New Energy Vehicles to win green car credits which then make up for the negative points from their production of vehicles with combustion engine.
Nissan looks set to run out of credits, so it should buy them from rivals or increase its production of electric vehicles. Since buying credits would lead to profitability, it is favoring the second strategy, one of the sources said.
Even cheaper electric vehicles produced locally by global rivals like General Motors through joint ventures have proven to be a success story with customers, especially in large 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 aims to change things more decisively, ”said one of the sources familiar with Nissan’s plans.
($ 1 = 6.4767 Chinese renminbi yuan)
($ 1 = 103.8300 yen)
Additional reporting by Tim Kelly in Tokyo; Editing by David Clarke