EV growth prompts Nissan to spend $250 million on U.S. engine plant

YOKOHAMA, Japan – CEO Makoto Uchida, acknowledging that the market for electric vehicles is expanding faster than he expected, says Nissan Motor Co. will spend $250 million on the Japanese carmaker's U.S. powertrain plant in Decherd, Tenn., to support electrification of its U.S. lineup.

Uchida declined to say when the investment will happen or detail what exactly it will fund. But the Nissan boss described the outlay as part of the company's stepped-up U.S. electrification plans amid faster acceptance of EVs in America and government initiatives supporting that demand.

"The world is accommodating EVs much faster than we thought in the past," Uchida said in a Jan. 20 interview at Nissan's global headquarters here south of Tokyo.

In November 2021, barely more than a year ago, Nissan forecast that half of its global sales will be electrified by the fiscal year ending March 31, 2031. In the U.S., it predicted, some 40 percent of its volume will come from full electric vehicles.

Uchida now expects Nissan to exceed those targets, but he didn't say by how much.

"The electrification ratio in each market will probably grow faster than we thought," he said.

Pushing the trend is a flood of EVs from competitors that is fanning interest in zero-emission cars, Uchida said. At the same time, regulations and government incentives are helping create a market environment that buoys EV adoption. Uchida cited the EV tax credits provisioned under the new Inflation Reduction Act as one measure fanning long-term demand.

"The IRA is maybe a challenge for us in the short term," he said. "But in the future, it will probably make for more penetration of the market by electric vehicles."

Nissan's upcoming investment in Dechard is part of the company's buildup of a U.S.-based EV manufacturing hub. The plant churns out about 1.4 million engines a year, ranging from the 5.6-liter 8-cylinder behemoth for the Titan pickup to the diminutive 1.5-liter three-banger for the Rogue crossover.

But Decherd also makes the e-motor for the Leaf electric hatchback assembled at the nearby Smyrna plant. It is reasonable to assume the new investment will expand electric motor output.

Nissan began manufacturing the Leaf and its batteries in Tennessee a decade ago.

The Decherd outlay follows last year's announcement of a $500 million investment to retool its Canton, Miss., assembly plant to build two all-electric sedans. Those vehicles, one for the Nissan brand, the other for Infiniti, will enter production in 2025 and will need their own motors.

Uchida said the outlay boosts Nissan's new commitments to U.S. electrification to $750 million. But more U.S. investment will come, he said, under the company's previously announced plan to spend $15.58 billion (some 2 trillion ¥) on electrification worldwide through 2026.

"We have already started to further our commitment because it's a very important market for us," Uchida said of his U.S. business. A revised U.S. electrification target will likely be unveiled around the time Nissan's current midterm plan ends, on March 31, 2024.

Nissan's U.S. plan will center around pure electric vehicles rather than hybrids such as the company's e-Power range-extender setup, he said. E-Power, a popular technology in Japan, isn't as good a match for the high-speed, long-distance driving conditions in the U.S.

The 2030 vision of deriving 40 percent of Nissan's U.S. sales from electric vehicles represents a big jump from where the company is today. In the fiscal year ended March 31, 2022, just 1.4 percent of Nissan's North American volume came from pure EVs.

Nissan offers only two EVs in the U.S. — the Leaf, which sold 12,025 units in calendar year 2022, and the newly launched Ariya crossover, which had sold just 201 units by year end.

Globally, only 13 percent of Nissan's sales were electrified, including hybrids. The company sold 477,000 hybrids and EVs in the fiscal year through March 31, 2022.

Looking ahead, Uchida said Nissan's electrification plans will get a turbo boost with the advent of all solid-state batteries. Nissan is developing the technology in-house with the goal of mass producing the next-generation batteries in 2028. Because they are safer, lighter, more energy dense and faster-charging than today's lithium ion batteries, they will enable electrification of a wider array of vehicle types, he said. That could spur volume sales in segments such as EV pickups and EV sports cars.

"That is our tipping point," Uchida said. "We want to make that a core strength of Nissan."

In addressing ongoing talks about Nissan's possible investment in an EV-oriented spinoff from French partner Renault, the Nissan boss said the critical question facing his Japanese carmaker is how such a restructured operation can jump-start the EV operations of both automakers.

Renault and Nissan, he said, each see value in breaking with hidebound business practices as the global EV race heats up with a flood of new entrants from Silicon Valley, China and beyond. New competitors, he said, have new business paradigms that require rethinking by legacy players.

"The world is evolving," Uchida said. "If we don't get out of our comfort zone, we will be left behind."