[Text/Observer Network Pan Yuzhen Editing/Gao Shen] "I am very sorry that things have come to this in such a short time," reported the Nikkei Asian Review. Due to poor performance, Nissan Motor announced on May 9th that it would abandon its plan to build its first domestic battery factory; therefore, Executive Director of Nissan, Hideji Hirata, expressed his apology when he went to Fukuoka Prefecture to report the situation on the same day.

The Ministry of Economy, Trade and Industry of Japan once set an ambitious goal: to increase domestic battery production capacity to 150GWh/year by 2030 and provide subsidies for about 30 related projects. The ministry estimated that current commitments could ensure an annual capacity of 120GWh, but Nissan's withdrawal poses a serious threat to this target.

In the eyes of the Nikkei, Japanese automakers prioritize short-term profits over long-term investments, which will lead them to repeat the mistakes made in the semiconductor and liquid crystal display sectors, ultimately losing the market for electric vehicles and batteries to China.

Consequences of Performance Collapse

Just last January, Nissan announced plans to build a lithium iron phosphate battery plant in Kitakyushu City, Fukuoka Prefecture, with a planned annual capacity of 5GWh, originally scheduled to start production in July 2028. The factory aimed to reduce battery costs by 30% and equip them in entry-level electric vehicles produced after 2028, to help Nissan achieve its goal of having 40% of its vehicles be electric by 2030.

In addition, the factory could bring 500 jobs and approximately 1 trillion yen (about 50 billion RMB) in industrial value to Kitakyushu City, for which the Japanese government invested 55.7 billion yen (about 2.77 billion RMB) in subsidies for the plant.

Nissan Motor Reuters

However, due to Nissan's financial difficulties in recent years and the failure of the merger negotiations with Honda in February, Nissan had to undergo strategic contraction.

Ivan Espinoza Reuters

Corporate Retreat

Similarly, at a crucial moment in building Japan's domestic battery supply chain, Toyota also decided to delay the construction of its domestic battery factory.

In March this year, President Akio Toyoda visited Governor Seitaro Hatto of Fukuoka Prefecture, stating that Toyota's plan to build a new battery factory in Fukuoka in April this year would be postponed, and the site selection agreement would be delayed until autumn this year.

According to the original plan, the factory was scheduled to begin operations in 2028, providing batteries for the Lexus factory in Kyushu to produce next-generation pure electric vehicles with a range of 1,000 km. The Ministry of Economy, Trade and Industry of Japan also planned to provide subsidies for the construction of the factory.

Toyota cited reduced global demand for pure electric vehicle models and high costs associated with electric vehicle production lines and battery factories as reasons for delaying the construction. Additionally, several new technologies for electric vehicles still require testing and validation.

Lexus Factory in Fukuoka Toyota

On the other hand, Panasonic Group announced layoffs of 10,000 people in early May and expects to incur restructuring costs of 130 billion yen (approximately 6.47 billion RMB) in the fiscal year 2025. Overall, Panasonic anticipates a 13% drop in operating profit for the fiscal year 2025, reaching 37 billion yen (approximately 18.42 billion RMB).

As the only Japanese power battery supplier ranked among the top ten globally, Panasonic's installed capacity data for 2024 shows 35.1GWh, a 18% decrease from the previous year, making it the company with the largest decline among the top ten globally. Its market share is only 3.9%, ranking sixth globally, but down 2.2 percentage points from the previous year.

In contrast, six Chinese companies are among the top ten globally, accounting for a 67.1% market share. Last year alone, CATL's installed capacity reached 339.3GWh, with a market share of 37.9%, nearly ten times that of Panasonic.

Currently, Panasonic still plans to invest $4.2 billion (approximately 30.3 billion RMB) with Subaru to build a factory in Gunma Prefecture, Japan, targeting production start-up in 2028. However, under Nissan and Toyota's reduced battery production plans, the smaller-scale Subaru will face greater investment pressure.

Difficult to Shake Off Dependence on China

The weak performance of Japanese cars in the global market is caused by various factors.

Firstly, the product strength of Japanese electric vehicles is not prominent, with insufficient demand both domestically and internationally. Previously, in 2023, Toyota announced that it would increase its global annual sales of pure electric vehicles to 1.5 million by 2026. However, the latest data shows that Toyota's global sales of pure electric vehicles in 2024 were only 140,000 units, accounting for just 1.3% of total sales; after two adjustments, the production target for this year has been reduced to 800,000 units.

It is evident that the market share of Japanese electric vehicles not only falls far short of Chinese competitors with more than half of the market penetration rate for new energy vehicles but also lags significantly behind European brands like Volkswagen in terms of scale.

Regarding the domestic market in Japan, only about 60,000 electric vehicles were sold last year, a one-third decrease compared to the previous year, and their proportion of new car sales remains below 2%.

On the other hand, Japan itself is not enthusiastic about developing electric vehicles. Currently, Japanese automakers represented by Toyota, Nissan, and Honda still consider gasoline-powered vehicles and hybrid models as core products.

Even if Japanese manufacturers are committed to researching and producing power batteries, they still find it difficult to break away from dependence on the Chinese supply chain.

Data from the Nomura Economic Research Institute shows that as of 2023, Chinese enterprises hold shares of 89.4%, 93.5%, 87.4%, and 85% respectively in the positive electrode materials, negative electrode materials, separator, and electrolyte fields.

For this, the Nikkei lamented that China controls the entire supply chain from raw materials to finished batteries. For instance, Japan heavily relies on importing lithium hydroxide from China, which is a core material for positive electrodes. This vertical integration enables Chinese enterprises to achieve economies of scale unmatched by their Japanese competitors. As Chinese enterprises' competitiveness becomes more prominent globally, Japan's economy is also suffering significant impacts.

This article is an exclusive contribution by the Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7506110044779397641/

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