The $1.1 Billion EV Battery Factory That Went Under
Believe it or not, Nissan was all set to dive headfirst into cobalt-free battery production with a state-of-the-art LFP (Lithium Iron Phosphate) plant on Japan’s Kyushu Island. Scheduled to break ground with a hefty $1.1 billion investment and promise of 500 new jobs, the facility aimed to crank out 5 GWh of batteries annually by 2028. It looked like a game-changer for one of the early adopters of electric mobility, but the plug was pulled before the first foundation was poured.
So what happened? According to reports from Reuters and the Japanese Ministry of Economy, Trade and Industry, government subsidies were on the table for domestic battery makers. But Nissan decided to hit the brakes. Rumors swirl that shifting market forces and internal priorities left the project on shaky ground. Despite early enthusiasm, the plan simply didn’t align with Nissan’s new financial reality and strategic roadmap.
Struggling Finances and Tough Choices
Mounting Losses and Budget Cuts
Nissan’s balance sheets have been anything but rosy this year. The automaker projected a net loss of up to ¥750 billion (around €4.6 billion) for the fiscal year ending March 2025. Faced with this looming shortfall, the leadership had to make some hard calls. Why funnel €1.2 billion into a battery plant when cost-cutting and core product realignment are top priorities? The math just didn’t add up.
Restructuring became the name of the game. Under new CEO Ivan Espinosa, Nissan is slashing global production capacity by 20% and eyeing early retirement packages for around 9,000 employees. This isn’t just belt-tightening for the sake of appearances—team sources say it’s a vital pivot to conserve cash and streamline operations. In that context, nixing a huge capital expenditure on a standalone battery plant made more sense than ever.
The U.S. Market Loves Imports—for a Price
Nissan’s deep reliance on the U.S. market adds another layer of complexity. In 2024, American sales accounted for roughly 30% of Nissan’s total automotive revenue. But Washington isn’t exactly rolling out the red carpet for imported cars these days: a hefty 25% tariff now applies to vehicles shipped from Japan or Mexico. That extra tax on nearly half of Nissan’s U.S. volume eats directly into margins and makes any new investment a tougher sell.
With import duties looming larger every quarter, executives took a hard look at every project. The proposed Kyushu plant would have added manufacturing diversity, sure—but at the cost of breaking the bank. When you’re racing to remain competitive in the EV arena, sometimes it pays to pause and reassess rather than plow ahead.
Tapping an Old Partnership with Renault
Here’s the silver lining: Nissan isn’t going solo on its electric future. Instead, it’s doubling down on a proven alliance with Renault. These two companies go way back, sharing platforms, R&D, and even production lines. By leveraging Renault’s expertise and AmpR EV architectures, Nissan can roll out new models without wiring up its own battery factory.
The upcoming Nissan Micra is expected to ride on Renault’s revamped platforms, likely the same one that spawned the new Renault 5. The Micra, along with future iterations of the Juke and Leaf, can draw on already-tested battery packs and manufacturing setups. And let’s not forget the Ariya SUV, which uses the CMF-EV platform today. Pooling resources like this cuts lead times, lowers development costs, and keeps those cash registers ringing.
A Leaner, Meaner EV Lineup
By partnering with Renault, Nissan frees itself from the burden of constructing and running a dedicated battery plant. Instead, it can focus on styling, software, and customer experience—areas where it excels. The trade-off? Less direct control over battery chemistry and supply chain, but potentially a faster time-to-market and stronger profitability.
Analysts point out that this approach allows Nissan to stay nimble. It can pivot between suppliers, tap into economies of scale, and adjust product specs without the sunk cost of a specialized facility. In today’s fast-evolving EV landscape, agility often trumps ownership.
What’s Next for Nissan’s EV Strategy?
Nissan’s decision to scrap the Kyushu battery project may sound like a setback, but it’s really a strategic retreat to gain future ground. By cutting capital-intensive projects and doubling down on partnerships, the automaker is betting on volume, efficiency, and shared tech to keep its EV lineup competitive. It’s a bold move that could pay off big if execution goes smoothly.
Keep an eye on Nissan over the next couple of years. With fresh models on the way, a leaner cost structure, and Renault’s backing, the brand has a shot at reclaiming some of its early EV glory. Just don’t expect a new factory ribbon-cutting ceremony anytime soon—this time, they’re playing it smart.
