Nissan feels the pressure of BYD’s electric car price war in China

Nissan is the latest victim of BYD’s “liberation war” against gasoline-powered cars. Following BYD’s aggressive price cuts this year, Nissan is closing a factory in China as the company struggles to keep up with demand.

As for many established automakers, China is a key market for Nissan. Almost a third of Nissan’s global sales and net profit are generated in China.

After falling out of the top 5 Chinese automakers (by market share) in 2022, Nissan’s problems are deepening. Nissan’s sales fell 16% in China last year, and that trend is continuing in 2024.

Nissan’s sales fell another 2.8% last month, with 64,233 vehicles sold in China. The company cut its forecast by 23% last year, expecting vehicle sales of 800,000 vehicles in fiscal 2024. According to NikkeiNissan will achieve this with one less factory.

Nissan is closing its plant in Changzhou because more cars are being built there than can be sold.

The plant accounts for about 8 percent of Nissan’s production capacity in China and has an annual capacity of about 130,000 units. According to the report, the plant will close on Friday.

As part of its joint venture with Chinese company Dongfeng Motor, Nissan operates eight plants in the region. The total capacity is around 1.6 million vehicles per year, double the sales figures forecast by Nissan for fiscal year 2024.

Nissan closes China plant in wake of price war over BYD electric cars

The plant closure comes against a backdrop of Nissan struggling to keep up in the increasingly competitive Chinese electric vehicle market.

China’s largest car manufacturer BYD started a “liberation war” against vehicles with combustion engines at the beginning of the year. The aim is to continue to take market share away from gasoline-powered vehicles with cheaper electric vehicles. So far, this seems to be working.

BYD has drastically reduced prices while introducing cheaper electric models. The cheapest model, the Seagull EV, costs less than $10,000 (69,800 yuan).

According to BYD CEO Wang Chaunfu, electric vehicles have reached the “knockout round” and the next two years will be crucial for automakers to catch up.

As cheaper, more modern models come onto the market, BYD must expect the market share of joint venture brands (such as Nissan) in China to fall from around 40 percent to 10 percent.

Nissan is not the only established carmaker under pressure. Japanese competitors Toyota, Mitsubishi and Honda have also withdrawn from China due to falling sales figures.

Meanwhile, BYD is looking to expand its global presence after overtaking China’s electric vehicle market. BYD is close to signing a contract for a factory in Mexico that would be among the country’s largest. The company expects to sell 50,000 vehicles in Mexico this year.

BYD is also expanding in Nissan and Toyota’s domestic market. According to the Japan Automobile Importers Association, BYD accounted for over 20% of Japan’s electric car imports in January.

With the launch of longer-range and lower-priced models, BYD’s momentum is expected to continue. China’s leading automaker is also expanding into new segments such as pickups (check out the new Shark PHEV), midsize electric SUVs and luxury.