Nissan Cancels EV Factory After £3.9bn Blow And Offers Early Retirement To Staff

With Nissan recently recording a net loss of between £3.69 billion and £3.95 billion ($4.91 billion to $5.26 billion), the Japanese automaker has now decided to throw away £83 million ($1.1 billion) by scrapping brand-new electric vehicle (EV) battery plan which it had announced in January this year.

Abandonment and Retirement

Japanese media reports said that Nissan is scrapping its EV battery plant in the southwestern island of Kyushu. The Nikkei newspaper reported that Nissan is also planning to offer early retirement packages to several hundred employees in Japan—the first domestic workforce reduction in 18 years.

'After careful consideration of (the) investment efficiency, we have decided to cancel the construction of a new LFP battery plant in Kitakyushu City, Fukuoka Prefecture,' Nissan said.

The Japanese automaker has also stated that they are 'taking immediate turnaround actions and exploring all options to recover its performance', indicating a desire to scale back even its domestic operations.

Documenting Nissan's EV Battery Factory Plans

Nissan had bold plans to bolster its EV offering, specifically in manufacturing essential parts that will be vital for said offering. In 2022, Nissan announced a £375.70 million ($500 million) investment to transform its Canton plant into a hub for EV production. The upgrade is intended to prepare the facility for assembling new all-electric models by this year, creating around 2,000 jobs focused on EV manufacturing.

Moreover, in partnership with Envision AESC, Nissan invested around £1.05 billion ($1.4 billion) in 2021 to create an 'EV36Zero' electric vehicle hub in Sunderland. This includes expanding the battery gigafactory, developing new electric models, and creating a microgrid powered by renewable energy.

Other R&Ds on Nissan's EV Programme

In 2021, Nissan unveiled its 'Ambition 2030' roadmap, pledging to invest £13.22 billion ($17.6 billion) over five years to develop EVs, solid-state batteries, and other electrification technologies. Part of its vision is to launch 23 electrified models (including 15 all-electric vehicles) by 2030.

As part of this roadmap, Nissan announced plans to commercialise solid-state batteries by fiscal year 2028. These batteries aim to reduce charging times and increase energy density compared to current lithium-ion technology. To advance this research, Nissan opened a pilot production line at its Yokohama Plant in Japan.

'All-solid-state batteries, which will be game-changers for EVs, have the potential for energy density approximately twice that of conventional lithium-ion batteries, significantly shorter charging time due to superior charge and discharge performance, and lower costs due to less expensive materials,' the company had said.

As a result of their research and development, Nissan's development and mass production of in-vehicle lithium-iron-phosphate (LFP) batteries were certified in Japan by the Ministry of Economy, Trade and Industry (METI) in 2024.

What Went Wrong?

Nissan's EV plans have faced several setbacks despite its early lead with the Leaf. Financial analysts say Nissan has struggled to keep pace with faster-moving rivals like Tesla and BYD, partly because of its conservative approach and delays in launching new EV models.

Supply chain disruptions and the high cost of battery materials have further complicated Nissan's efforts, forcing it to reassess production targets and factory investments. Additionally, Nissan's alliance with Renault and Mitsubishi faced years of tension, slowing joint EV projects and technology sharing.

While Nissan remains committed to electrification, these challenges have exposed the automaker's difficulty balancing cost, innovation, and competitiveness in a rapidly evolving global EV market.

Perhaps most troubling is what this signals about Nissan's commitment to the electric vehicle transition. While the entire industry races toward electrification, Nissan appears to be moving backward, retreating from investments that could have secured its future.