Mitsubishi Motors (7211.T) of Japan said that it will cease manufacturing its automobiles at its joint venture in China and transfer its ownership in the business to its Chinese partner. With this announcement, Mitsubishi Motors (7211.T) became the latest international carmaker to reduce its activities in the most lucrative market for automobiles in the world.
The Japanese carmaker made this move amid intense pricing rivalry in China, which has prompted other global manufacturers, such as Hyundai Motor (005380. KS) and Stellantis (STLAM.MI), to restructure their companies to cut costs and compete more effectively.
In a separate announcement made on Tuesday, Mitsubishi Motors stated that it plans to invest up to 214 million dollars or up to 200 million euros in the new electric car subsidiary of its French counterpart, Renault (RENA.PA), as part of an effort to improve its position in Europe and other countries.
In 2012, the Japanese automobile manufacturer launched a joint venture in China in partnership with Guangzhou Automobile Group (GAC) (601238. SS) and the trading firm Mitsubishi Corp (8058.T).
According to the announcement made by the Japanese car manufacturer, following the transfer of Mitsubishi Motors’ and Mitsubishi’s interest in the joint venture to their Chinese partner, the JV would evolve into a wholly-owned subsidiary of GAC.
GAC said in a separate statement published on the WeChat social media platform that the JV factory would begin producing GAC’s Aion vehicles in June 2024. This will assist the EV brand in reaching its goal of a total annual capacity of 600,000 units by the time the goal is reached.
As a result of the company’s restructuring efforts in China, Mitsubishi Motors expects to record an exceptional loss in the current fiscal year of 24.3 billion yen ($162.40 million). It did not change the profit prediction it provided for the whole year.
AN INVESTMENT IN AMPERE
Mitsubishi Motors has stated that it wants to strengthen its electric vehicle (EV) development technology with the help of its investment in Renault’s Ampere electric vehicle (EV) company. Renault plans to float its Ampere EV business on the stock market next year.
Speaking on the sidelines of an event in Paris, Renault Chairman Jean-Dominique Senard stated that he was pleased to hear about Mitsubishi’s investment and that he had always been sure that the business would participate in Ampere.
“As a first step of this collaboration, Ampere will supply an EV on an OEM (original equipment manufacturer) basis in the European market,” according to a press release from Mitsubishi.
Senard stated that he hopes to have further in-depth conversations with Mitsubishi while he is in Japan on his forthcoming trip.
Following the completion of a restructured alliance in July by Mitsubishi’s partners, Renault and Nissan Motor (7201.T), the decision to invest in Ampere was made.
In line with its strategic investor role and goal of earning a board seat in the newly formed firm, Nissan has already committed to investing up to 600 million euros in the subsidiary.