Nissan cuts petrol car production as China's electric shift outruns its plans

Nissan will cut back petrol car manufacturing and expand production of battery electrics and plug-in hybrids after admitting it was caught out by the pace of China's shift to electric vehicles. The company lowered its full-year sales forecast to between 2.97 and 3 million cars, from a previous 3.15 million, with chief executive Ivan Espinosa calling China "our biggest challenge."

"Demand is weaker, competition is intensifying, and the shift to new energy vehicles is happening faster than expected," Espinosa said. "The market is being very, very harsh."

Nissan's sales in China fell 22% in the first half of the year and 32% in the first nine months, with the pressure intensifying from July through October. Its Chinese lineup is led by the Sylphy family of saloon cars, a range heavily associated with petrol engines — the exact category that Chinese manufacturers, built up with substantial state subsidies, set out to take from the internal-combustion incumbents of Germany, Japan and the United States.

The retreat now shows on assembly lines. Nissan is cutting local production in China, exporting some products from it, and trying to ramp up its N series of electric and plug-in hybrid models. In Japan and North America, by contrast, sales increased — and the electric shift there has been slower because of policy decisions, with Donald Trump having torn up incentives for battery-car makers in the United States. The same company now faces an electric market in China that moved without asking its permission, and petrol-leaning markets at home that moved more slowly than it planned.

In Britain, where Nissan's only European factory stands in Sunderland, the company has lobbied to weaken the zero-emission vehicle mandate and to continue selling petrol cars after 2035. The demand data runs the other way: sales of used electric vehicles are rising much faster than those of petrol cars, a shift pushed along by the Iran war driving up fuel prices. Ian Plummer, chief customer officer at the car-sales site Autotrader, said retail sales of electric vehicles were up 56% year on year in October, with electrics now one in ten retail sales on the platform.

Brussels adds a third constraint. The EU's proposed "Made in Europe" rules, as drafted, would exclude all of Nissan's cars from subsidies and other incentives within the bloc; Espinosa said he was hopeful that products from Sunderland and Japan would be included.

In China, Nissan is cutting petrol production because buyers moved faster than its plans. In Britain, it is lobbying for the right to keep selling petrol cars after 2035.