Nissan to Invest $9 Billion in China in Race for EV Dominance

“The growth in local competition has been much faster than we expected," said Nissan as it raised deliveries of EVs by 1 million units by 2022.

As it vies to become the largest global electrified vehicle maker in the country, Nissan Motor Co. intends to spend 1 trillion yen (US$9 billion) over five years in China.

The Japanese carmaker aims to raise annual deliveries by 1 million units by 2022, with much of the growth coming from electrified models, Jun Seki, head of Nissan’s China operations, said on Feb. 5.

Nissan, facing a plateauing U.S. market and waning demand at home, is banking on the world’s largest auto market to drive growth over the next five years. Global rivals including Volkswagen AG, General Motors Co., Honda Motor Co. are also investing more in China in the race to become the fastest growing major brand in a country that has focused on putting more electrified vehicles on the road to reduce emissions.

Nissan, maker of the Leaf EV and already the largest Japanese carmaker in China, is planning to introduce 20 electrified models by 2022 in China.

Under the plan, electrified cars will account for 30% of all sales in 2022, and by 2025, all Infiniti models will be electrified.

Nissan set up a joint venture with China’s Dongfeng Motor Group in 2003 and in August last year, established a joint venture with Renault SA and Dongfeng to develop electric cars for the local market.

The Japanese automaker was initially uncertain about how fast demand would grow for electrified vehicles in China and wanted to avoid over-investing, said Seki.

“The growth in local competition has been much faster than we expected,” he said. “Now we have come around to changing our local strategy.”

Carmakers from Nissan to VW, Ford Motor Co. and GM are looking for ways to meet China’s emission-reduction requirements.

China is implementing a cap-and-trade framework that will penalize companies that don’t meet fleet-based limits on emissions. VW said that along with its partners the company will invest more than 10 billion euros (US$12 billion) to make and develop a range of new-energy vehicles in China. Ford said that it will invest 5 billion yuan with partner Anhui Zotye Automobile Co. to produce and sell small electric cars in the country.

CEO Hiroto Saikawa, who took the job last year, has said China is key for Nissan. The country will contribute almost a third of its targeted revenue of 16.5 trillion yen by 2022, under the mid-term plan, becoming the single-biggest market for the carmaker.

The automaker sold a record 1.52 million vehicles in the country last year, compared with 1.59 million in the U.S., its top market.