Nissan’s Strategic Moves in EV Market: A Path to Recovery and Growth

Nissan Motor has been reported to be planning a significant step in its electric vehicle (EV) business by sourcing batteries from South Korea’s SK On starting around 2028. This development, which was highlighted by the Nikkei newspaper, is seen as part of the Japanese automaker’s broader turnaround strategy. Amid challenges, including restructuring efforts and a competitive EV market landscape, Nissan’s move reflects its intent to strengthen its position in the industry.  

The procurement agreement between Nissan and SK On is said to involve 20 Gigawatt-Hour (GWh) of ternary lithium batteries, sufficient to power approximately 300,000 standard EVs. By securing this supply, Nissan aims to bolster its capacity to meet increasing demand for electric vehicles, particularly in the United States. A spokesperson from Nissan has yet to provide official confirmation or further details on this agreement.  

In a related development, Nissan’s executive vice president Hideyuki Sakamoto confirmed that the company has been considering the production of compact EVs at its plant located on Japan’s southern island of Kyushu. This confirmation aligns with a report from 2024, which suggested that Nissan might initiate in-house production of ultra-compact EVs at the Kyushu facility from the business year starting in April 2028.  

The decision to utilize the Kyushu plant reflects Nissan’s strategic emphasis on geopolitically advantageous locations and cost-efficient production bases. Sakamoto, responsible for manufacturing and supply chain management, emphasized the competitiveness of the Kyushu region, noting that no reduction in production capacity was currently planned for the facility as part of the company’s ongoing cost-cutting measures.  

Nissan has been actively implementing a turnaround plan that includes reducing its global manufacturing capacity by 20% and cutting 9,000 jobs worldwide. These efforts, announced in a prior restructuring plan, are aimed at addressing financial difficulties and streamlining operations. The success of this turnaround strategy is expected to significantly influence Nissan’s ongoing merger discussions with Honda Motor.  

The potential merger between Nissan and Honda, which is anticipated to materialize by 2026, marks a historic shift in Japan’s automotive industry. This move underscores the growing competition from Chinese EV manufacturers, who have emerged as formidable players in the global market. For Nissan and Honda, uniting forces could represent a strategic response to this evolving landscape, enabling them to better compete with both established and emerging rivals.  

The partnership with SK On, a major South Korean battery manufacturer, is seen as a critical step for Nissan in achieving its EV ambitions. By securing a reliable supply of high-quality batteries, the automaker aims to enhance its product lineup and cater to the growing demand for electric vehicles in the U.S. market.  

Battery supply has become a cornerstone of competitiveness in the EV industry, with automakers worldwide vying to secure partnerships with leading battery producers. For Nissan, this collaboration is expected to support its broader sustainability goals while contributing to its profitability in the EV segment.  

Nissan’s efforts to ramp up its EV production and streamline its operations are indicative of broader trends in the automotive industry. Legacy automakers are facing mounting pressure to transition to electric mobility as governments implement stricter emissions regulations and consumers increasingly favor environmentally friendly vehicles.  

Moreover, the rise of Chinese EV makers has intensified competition, prompting established players like Nissan to explore strategic collaborations and mergers to maintain their market positions. The planned merger with Honda, if successful, could create a stronger entity capable of leveraging economies of scale and pooling resources for innovation.   

Nissan’s strategy of aligning its production capabilities with its sustainability goals highlights its commitment to long-term growth. The potential introduction of compact EVs produced in-house at the Kyushu plant is expected to enhance profitability by reducing reliance on external suppliers and increasing operational efficiency.  

At the same time, the partnership with SK On signifies Nissan’s proactive approach to addressing supply chain challenges and ensuring the availability of critical components for its EV lineup. This collaboration is likely to position the automaker favorably in the competitive U.S. EV market, where demand continues to rise.  

As Nissan navigates its turnaround plan, the outcomes of its strategic initiatives, including the merger with Honda, will play a pivotal role in shaping its future. The company’s ability to adapt to changing market dynamics and leverage its strengths will determine its success in an increasingly electrified automotive industry.