Mitsubishi Motors: Can Electrification Revive Declining Sales Amid Fierce Competition?

Mitsubishi Motors, once a pioneer in hybrid and plug-in electric vehicles (PHEVs), faces a critical juncture. Despite a recent sales rebound in North America, its global production declined in 2024, and operating margins weakened under the weight of tariffs and supply chain pressures. As the automaker accelerates its "Momentum 2030" electrification strategy—targeting 50% EV sales by 2030 and full electrification by 2035—the question looms: Can Mitsubishi sustain this pivot amid intensifying competition from BYD, Tesla, and legacy rivals like Volkswagen?

Sales Performance: A Mixed Picture

Mitsubishi's North American sales surged 25.8% in 2024, driven by the Outlander PHEV, which claimed record annual sales of 6,975 units. This model's third consecutive "Family Green Car of the Year" win underscores its appeal. However, global production fell 10% in fiscal 2024, with overseas output in Thailand and Europe plummeting due to weak demand and supply chain bottlenecks. Domestic sales in Japan rose 6%, but exports dropped 2%, signaling uneven progress.

The company's financials reflect this tension: sales revenue dipped marginally to JPY 2.788 trillion, while operating income fell 27% to JPY 138.8 billion. A key drag was the 2.1% average price hike in the U.S. to offset 25% tariffs on Japanese imports—a move that risks pricing out cost-sensitive buyers.

The Electrification Gamble

Mitsubishi's Momentum 2030 plan hinges on three pillars:
1. Electrification: Launch one new or refreshed model annually through 2030, nearly doubling its U.S. lineup. The crown jewel is a 2026 BEV based on the next-gen Nissan Leaf, leveraging Alliance synergies.
2. Market Expansion: Increase U.S. dealerships and enter new segments like Australia, while piloting battery-swapping tech in Tokyo with Mitsubishi Fuso and Ample.
3. Cost Control: Modernize dealer networks and reduce production costs via local partnerships (e.g., Nissan-supplied EVs for North America).

The strategy's success depends on execution. The Outlander PHEV's dominance (35% of North American sales) provides a solid base, but Mitsubishi must replicate this with new BEVs in a crowded market.

Competitor Landscape: BYD's Shadow and EV Price Wars

The BYD juggernaut poses the most immediate threat. In early 2025, BYD's EU sales surged 359% year-on-year, overtaking European brands like Fiat and Seat. Its 1000V high-voltage charging system and plans for 4,000+ megawatt stations in China are reshaping global EV infrastructure. Meanwhile, Tesla's April 2025 sales dropped 49%, suggesting vulnerability to BYD's pricing and range advantages.

In the U.S., Mitsubishi faces Volkswagen's "massive" tariff-avoidance investments and Honda's AI-driven tech partnerships (e.g., with Momenta). The EU market is also shifting: BEV adoption hit 15.3% in April 2025, while hybrids surged to 35.3%, squeezing traditional combustion engine sales. Mitsubishi's lack of a dedicated BEV platform outside the Outlander PHEV could be a liability as rivals roll out purpose-built EVs.

Risks and Opportunities

Risks:
- Trade Tariffs: U.S. tariffs force Mitsubishi to balance pricing and profit margins.
- Production Gaps: Slumping overseas output (e.g., Thailand's 27% decline) may hinder global scaling.
- Regulatory Headwinds: EU battery safety rules (effective 2026) could raise costs for Mitsubishi's Asian-manufactured models.

Opportunities:
- Alliance Synergies: Nissan's support for U.S. production and BEV co-development reduces R&D costs.
- Niche Appeal: The Outlander PHEV's reliability and 400-mile range retain loyal buyers in North America.
- Battery Swapping: The Tokyo pilot with Ample could position Mitsubishi as a leader in commercial EV logistics—a $120B market by 2030.

Investment Outlook

Mitsubishi's shares have lagged peers, down 18% since 2020 versus BYD's 250% surge. For investors, the key is execution risk. Success hinges on:
1. Delivering the 2026 BEV without delays or cost overruns.
2. Expanding U.S. dealerships while avoiding price erosion.
3. Navigating tariff and regulatory hurdles without sacrificing margins.

Recommendation: Mitsubishi offers long-term EV exposure at a discount to peers. However, its stock is high-risk until it proves it can scale production and compete with BYD's pricing. Investors should consider a modest position, with a focus on catalysts like BEV launches and tariff resolution.

In conclusion, Mitsubishi's electrification strategy is ambitious but vulnerable to external headwinds. Its survival hinges on leveraging its PHEV legacy, Alliance partnerships, and niche markets—while outmaneuvering giants like BYD in the EV arms race.