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Nissan to cover partners' costs even if their EV parts go unused

Automaker strives to court quality suppliers and fend off competitors

Nissan is making a move to fend off emerging EV makers from China and elsewhere that are boosting their market presence with budget models. (Source photos by Kosuke Imamura and Tomoki Mera)

TOKYO -- Nissan Motor plans to compensate parts makers that join with it in developing electric vehicles so as to share burdens and deepen collaborative relationships, Nikkei has learned.

The Japanese automaker will bear the suppliers' costs when they miss an order or postpone development, aligning itself with a global trend as emerging EV makers from China and elsewhere boost their market presence with budget models.

Under its new Alliance Strategic Partner framework, Nissan will increase the joint development efforts it undertakes with parts makers, working closely with them from the early stages of development to create specifications for new components.

If a jointly developed part is not adopted, Nissan will defray a certain amount of the partners' costs. Personnel costs per project are expected to range from several millions of yen to tens of millions of yen (several tens of thousands of dollars to hundreds of thousands of dollars).

An EV prototype using a metal mold would raise costs to hundreds of millions of yen.

The joint production projects are expected to focus on core components such as the body frame and drive parts, which play big roles in reducing the weight of electric vehicles.

Parts makers participating in the ASP will include JATCO and Aichi Machine Industry, which have close Nissan ties.

Joint development costs will weigh heavily on parts makers whose parts do not end up in vehicles. The latest compensation system will make it easier for them to commit developmental resources and expertise. As for Nissan, the automaker hopes to improve the quality of its parts and its cost competitiveness.

Similar contractual arrangements between European automakers and Bosch and other suppliers generally require parts to be used; automakers must pay penalties if jointly developed parts are not integrated in finished models.

Taiwan's Foxconn has launched an EV contract manufacturing business, raising a concern for conventional automakers: Will nonautomotive industries offer better conditions than the legacy industry and corral quality parts producers?

For Nissan, the compensation scheme is also intended to keep parts makers closely attached to the company.

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