Nissan Axes $1B Battery Plant, Triggers Jobs Shakeup Amid Massive Losses

In a striking reversal that has sent ripples through Japan’s automotive sector, Nissan Motor Co. has announced the cancellation of its planned lithium iron phosphate (LFP) battery plant in Kitakyushu. This project, originally unveiled in January, promised a ¥153.3 billion ($1.05 billion) investment and the creation of about 500 new jobs. But now, in a move that underscores the deep financial strains facing the automaker, Nissan has walked back its commitment, citing concerns over investment efficiency.

“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,” the company said in a statement. This decision comes at a critical moment for Nissan, which is in the middle of a massive restructuring effort led by its newly appointed CEO, Ivan Espinosa. Espinosa, who replaced Makoto Uchida just last month, is tasked with stabilizing a company battered by global market pressures, domestic underperformance, and ballooning losses.

The cancellation is especially notable because it involves a project supported by the Japanese government, which had earmarked up to ¥55.7 billion in subsidies to back the battery plant. Originally set to begin operations in July 2028 or later, the facility was designed to produce up to 5 gigawatt-hours of battery capacity annually, an important step in Nissan’s efforts to scale up electric vehicle (EV) production and meet rising global demand. But the company’s financial reality appears to have forced a recalibration of those ambitions.

Last month, Nissan warned investors that it expected a record net loss of ¥700-750 billion ($4.8-5.1 billion) for the fiscal year ending in March, primarily due to impairment charges and underperformance in the domestic market. As part of its survival plan, the company is implementing sweeping cost-cutting measures, including slashing 9,000 jobs worldwide, reducing production capacity by 20%, and shutting down some of its facilities. In Japan, Nissan is preparing to offer early retirement to several hundred administrative employees—its first such program since 2007, when it trimmed 1,500 jobs to match shrinking domestic production.

For Espinosa, who faces intense scrutiny from shareholders and industry observers, these decisions are part of a broader effort to reposition Nissan for long-term viability. The cancellation of the Kitakyushu battery plant sends a clear signal: Nissan is willing to make tough, even painful, decisions in the short term to protect its balance sheet. But it also raises questions about the company’s long-term competitiveness in the fast-evolving EV market, where rival automakers like Toyota and Honda are aggressively expanding their battery and electric vehicle capabilities.

The implications extend beyond Nissan itself. Automakers worldwide are navigating a complex landscape shaped by electrification mandates, shifting consumer preferences, and global supply chain challenges. Nissan’s retrenchment suggests that even major players are rethinking where, and how, to place their EV bets. Will cutting back on domestic battery production cost Nissan dearly in future market share? Or will the company’s laser focus on financial recovery give it the breathing room needed to regroup and reenter the race stronger?

These are questions analysts will be pressing when Nissan unveils its full-year financial results and outlines its recovery strategy on Tuesday. For now, the company’s latest moves reflect a stark reality: survival comes first, and ambition will have to wait.