Nissan Motor Co.’s new Ariya electric car, aimed at putting the automaker on a comeback path, has been hampered by problems on its high-tech production line, slowing deliveries of the vehicles, four people familiar with the matter said.
Unveiled to strong reviews in 2020, the crossover is Nissan’s first all-new global vehicle in five years and signals its intent to reverse the turmoil following the ouster of former president Carlos Ghosn. But production was at least a third below plan, preventing Ariya from being shipped to new customers, according to three people and an explanation of production plans seen by Reuters. All declined to be named because the matter is private.
The first of 19 new electric vehicles Nissan plans to launch by 2030, the shortfall means a missed opportunity to capitalize on the Ariya’s popularity and testing needs. It also hampered the automaker’s plans for the growth of the electric vehicle market it helped pioneer before ceding its dominance.tesla
Production of the Ariya has been slowed by problems with the highly automated “smart factory” manufacturing system built for the model at its plant in Tochigi prefecture, north of Tokyo, two people familiar with the matter said. Nissan has designed a system that enables it to produce cars with different powertrains (battery, hybrid and combustion engine) on the same production line.
Implementation has proven to be “an extremely, extremely challenging challenge,” and the advanced paint line has been a headache, one of the people said. Nissan is also facing a shortage of plating for Ariya electronic components after a January fire at Chinese supplier Wuxi Huaxin Microelectronics, one of the people said. The supplier told Reuters it had shifted production to a second factory and was “working hard to resume production”.
In a statement to Reuters, Nissan said production at the Ariya faced challenges, including semiconductor supplies, disruptions in parts shipments and the factory’s paint lines. “Nissan is working at full capacity to restore the plant to full capacity,” the company said. S&P Global Ratings downgraded Nissan’s debt to junk status this week, saying profit margins and sales were unlikely to move as quickly as previously expected improve.
Production faces challenges after Nissan and France’s Renault agreed in January to overhaul their 20-year-old alliance on a more equal footing. Nissan also agreed to invest in Renault’s new electric vehicle business.
The Japanese automaker sparked an early wave of interest in electric vehicles in 2010 with the Leaf hatchback. But in 2020, the car’s lifetime sales have been surpassed by Tesla’s Model 3. EVs account for just 4.5 percent of Nissan’s global sales of 3.2 million vehicles in 2022. Nissan aims to produce 400 Ariyas per day, which equates to nearly 9,000 vehicles per month and more than 100,000 per year, according to two people familiar with the matter.
Output is expected to fall short of that level for the next two months, according to a production plan note last month seen by Reuters. Production is expected to be under 6,900 in March, around 5,200 in April and 5,400 in May, according to planning notes. That percentage has since decreased, one of the people said. Nissan did not comment on production targets or current volumes.
U.S. dealers stopped taking customer reservations last year, while Japanese dealers stopped taking orders in August. The Ariya was originally scheduled to launch in 2021, but was delayed until 2022 due to a global chip shortage.
Dublin Nissan in northern California has an Ariya for test drives but doesn’t sell it, said general manager Mario Beltran. Dealers are waiting for more products that could arrive this spring, he said.
“Just as the Beetle brought the VW back, I think the Ariya will bring Nissan back,” Beltran said, adding that some customers had already canceled their Tesla deposits on the Ariya.
The car has won praise for its bold exterior and sleek interior with lighting inspired by Japanese lanterns. The Ariya, which starts at about $43,000 in the U.S., is an alternative to the Tesla Model Y, which is about $4,300 more expensive after recent price cuts and U.S. incentives. Ariya is eligible for a $7,500 US credit paid to Nissan Finance on the lease.
The initial investment in the Ariya production line was 33 billion yen ($243 million), part of a “smart factory” initiative that Nissan says represents a new kind of robotic production system and a commitment to zero emissions. The new paint line is designed to paint the entire car, including the body and bumper, to improve efficiency and be more environmentally friendly.
Nissan has also invested in a new assembly technique that saves time by allowing the different powertrains to be lifted from below before the robot installs them. The new system uses automated pallets to install the pre-assembled powertrain.
First published date: March 10, 2023 at 11:17 am IST