Nissan Motor Co and China’s state-owned Dongfeng Group (東風集團) yesterday announced plans to develop 20 electric vehicles (EV) as part of a US$10 billion, five-year investment program, adding to efforts by global automakers to create commercially competitive electrics for the biggest auto market.
The venture between the two firms is to start sales of Nissan’s all-electric Leaf and two other electric models this year, said Jun Seki, president of the joint venture, called Dongfeng Motor Group Co (東風汽車), adding that three “affordable EV” compacts will be launched next year.
“Our EV offensive starts from 2018,” Seki said.
Nissan joins global automakers including Volkswagen AG and General Motors Co that are looking to China to propel future revenue and are investing billions of US dollars to develop electric vehicles that will appeal to Chinese drivers.
The appeal of electrics in China still depends heavily on subsidies, but Beijing is pushing automakers to develop the technology. Automakers face quotas that require EVs to make up at least 10 percent of their sales starting next year.
Regulators are using access to China’s market as leverage to induce global auto brands to help local companies that might become future competitors develop EVs. Foreign automakers that want to manufacture in China must work through local partners, most of them state-owned, and must share or help develop technology to satisfy the sales quotas.
Overall, Chinese sales of sedans, SUVs and minivans rose 1.4 percent last year from 2016 to 24.7 million units. Total sales of pure-electric and gasoline-electric hybrids rose 53.3 percent to 777,000 units, but accounted for only 2.7 percent of the market.
Nissan and Dongfeng have said they plan to develop 40 new models — half of them electric or hybrid — over the next five years.
Those are to be sold under the Nissan, Dongfeng and Infiniti brands, as well as the partnership’s low-price Venucia name.
By 2020, the partners have set an annual sales target of 360,000 electric or hybrid vehicles, or about 30 percent of the total, Seki told reporters, adding that last year’s total sales were 21,000 units.
“We need to accelerate cost reduction,” Seki said. “But to reduce costs, we need more volume.”
Overall, the joint venture aims to increase annual sales by 1 million units to 2.6 million by 2020.
Nissan-Dongfeng sales of EVs have failed to gain traction due to the relatively high sticker price of its models, which contain up to 85 percent imported components, Seki said.
“We probably underestimated our competitors,” Seki said. “We need really heavy localization to compete.”
China is an important factor in Nissan’s goal to increase its annual global revenue from ￥12.8 trillion to ￥16.5 trillion (US$116 billion to US$150 billion) by 2022, Seki said.
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