Nissan's Expeditious Response To The Much Sooner Than Expected Developments Of The EV Evolution

While EV leaders Tesla Inc TSLA and BYD Company Limited BYDDY, along with legacy automakers Ford Motor F, General Motors GM, and Volkswagen AG VWAGY brace for cooling EV demand by scaling back or delaying plans, Nissan Motor Co Ltd NSANY entered a new week by announcing the launch of 30 new models over the next three years, with 16 of them being electrified. The update to its medium-term business plan came as a response to addressing extreme market volatility, with the development of the EV industry and particularly the price pressures, coming in much sooner than expected.

Nissan President and CEO Makoto Uchida stated that Nissan is now targeting to sell an additional 1 million vehicles by the end of fiscal year 2026, while also aiming for an operating profit margin of more than 6% and total shareholder returns of more than 30% during the same timeframe which is the year ending in March 2027.

Collaboration Is The Way Forward

While focused on lowering costs by 30% until the end of the decade, Nissan will be developing EVs in “families,” by integrating powertrains and aiming to innovate the existing battery concept. Through smart partnerships, like the one that Nissan announced it is considering with its rival Honda Motor Co Ltd HMC, will help Nissan to deal with cut-throat competitors. Earlier in March, Reuters reported Nissan is considering a strategic partnership with Honda. Together, Nissan and Honda would collaborate to produce key EV components and develop AI in automotive software platforms. The potential partnership would help both Nissan and Honda achieve economies of scale as they are both threatened by BYD and Tesla.

Everyone agrees that there’s a lot of uncertainty.

Like Tesla that braced for a notably lower growth rate, as well as GM, Ford and other automakers, Nissan agrees that the next five years will be filled with uncertainty. Even the resilient Chinese powerhouse, BYD, guided for a slower growth pace. Through collaborations, Nissan aims to address the challenges by achieving scalability, which Japan’s third largest automaker by sales believes is key in overcoming the challenges that lie ahead. With its plan, titled the Arc, Nissan aims to ensure volume growth and prepare for an accelerated EV transition by balancing its portfolio between EV and combustion cars, while growing volumes in major markets and exercising financial discipline. Supported by smart partnerships, enhanced EV competitiveness, differentiated innovations and new revenue streams, Nissan expects the strategy to result in new business opportunities that will potentially bring in about $16 billion in revenue by fiscal year 2030.

We often forget that Nissan is an EV pioneer like Tesla, with its all-battery-powered Leaf that established the widespread acceptability of EVs. But Tesla, as well as BYD eclipsed its EV efforts. But, history does not have to repeat itself if Nissan learned from this experience as it aims to lay the foundation for long-term profitable growth with its undergoing strategy.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.

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