Nissan cuts China petrol output as electric sales accelerate

By Grace Kim

Nissan cut its forecast for this year to 2.97 million–3 million cars from 3.15 million, mainly because of struggles in China. China sales fell 22% in the first half and 32% in the first nine months, with pressure intensifying from July through October.

The Japanese carmaker is cutting local petrol-car production while increasing battery-electric and plug-in-hybrid output in response to accelerating demand and a severe price war in the world’s largest automotive market.

What does the China sales decline change?

“China remains our biggest challenge,” said Ivan Espinosa, Nissan’s chief executive. “Demand is weaker, competition is intensifying, and the shift to new energy vehicles is happening faster than expected. The market is being very, very harsh.”

Nissan’s response has three operational elements:

• Cut local production of petrol cars. The Sylphy-led product line-up was too heavily associated with petrol engines, Espinosa said.
• Export some locally made products.
• Ramp the N-series of battery-electric and plug-in-hybrid models. Plug-in hybrids combine a smaller battery with a petrol engine.

A wider market split

Nissan reported increased sales in Japan and North America, where the electric-vehicle transition has advanced more slowly. Policy decisions, including President Donald Trump’s withdrawal of incentives for battery-car makers, have contributed to that slower shift in parts of the global market.

This divergence leaves global carmakers balancing two positions. They can continue selling more profitable petrol and diesel cars, or risk losing ground to newer Chinese rivals as demand shifts toward battery vehicles.

China’s government provided substantial subsidies to its electric-car industry, creating an opportunity to overtake Germany, Japan and the United States in a sector those countries had dominated through internal-combustion-engine sales. That support produced a large field of Chinese electric-vehicle competitors, now chasing a shrinking market.

The UK policy contradiction

Nissan has lobbied to weaken the UK’s zero-emission vehicle mandate, which sets a target for increasing electric-vehicle sales, and to continue selling petrol cars after 2035. Its position contrasts with used-vehicle data showing much faster growth for electric cars than petrol cars.

Data released that week showed particularly strong electric-vehicle demand since the Iran war pushed up petrol and diesel prices. Ian Plummer, chief customer officer at the car-sales website Autotrader, said:

“The standout trend in the used car market is the rapid rise of retail sales of electric vehicles, up an eye-popping 56% year on year in October and now accounting for one in 10 retail sales on Autotrader.”

Sunderland’s subsidy exposure

Nissan’s only European factory is in Sunderland, in northern England. Espinosa said he remained hopeful that products from Sunderland and Japan would be included in the European Union’s proposed “Made in Europe” rules.

As drafted, those rules would exclude all Nissan cars from subsidies and other incentives within the EU. Inclusion would determine whether Nissan-built vehicles retain access to those benefits.

The next regulatory milestone is the EU’s treatment of Nissan cars under “Made in Europe,” alongside any revision of the UK’s 2035 zero-emission mandate. Until those decisions settle, Nissan’s battery-led China line-up still faces falling China sales, while its European output remains outside EU incentives under the draft rules.