Nissan's EV Crossroads: Can Strategic Alliances and U.S. Partnerships Secure Its Future?

The automotive industry is at a critical inflection point, with electric vehicles (EVs) driving seismic shifts in market dynamics, supply chains, and corporate survival. Among the players scrambling to adapt, Nissan finds itself at a precarious crossroads. Its recent decision to cancel a $1.1 billion lithium iron phosphate (LFP) battery plant in Japan while forging a partnership with SK On to secure U.S.-made batteries signals a radical strategic pivot—one that could redefine its long-term viability. For investors, the question is clear: Does this shift toward localized alliances and cost-cutting create an undervalued opportunity, or does it expose existential risks in a fiercely competitive EV landscape?

The Cost of Going Local: Abandoning the LFP Plant

Nissan’s cancellation of its LFP battery plant in Kitakyushi, Japan, marks a retreat from its earlier ambition to vertically integrate battery production. The project, aimed at reducing EV battery costs by 20-30%, was scrapped due to $4.8–5.14 billion in projected annual losses and a broader restructuring plan to cut $2.5 billion in costs by 2026. While the move saves capital, it also cedes strategic ground to rivals like BYD, which is aggressively expanding low-cost EVs in Japan and Southeast Asia.

The Risk: Without in-house LFP production, Nissan risks higher battery costs and slower response to supply chain disruptions. LFP batteries remain critical for price-sensitive markets, and competitors like BYD are already leveraging their dominance in this space.

The SK On Gambit: U.S. Localization as a Lifeline

Nissan’s partnership with SK On offers a lifeline. By sourcing nearly 100GWh of U.S.-made high-nickel batteries from 2028 onward, Nissan avoids tariffs on imported cells while tapping into SK On’s $661 million investment in U.S. battery plants (plus Nissan’s own $500 million for its Canton, Mississippi, EV plant). This localization strategy aligns with the U.S. Inflation Reduction Act, enabling tax-credit eligibility and faster time-to-market for models like the next-gen LEAF (targeted for 2028).

BYD’s stock has surged 40% YTD on aggressive pricing and scale, while Nissan’s shares remain stagnant amid restructuring uncertainty.

The Opportunity: The Canton plant’s focus on four EV models—including an e-Power hybrid Rogue—could capture the U.S. market’s premium EV demand. SK On’s 180GWh+ U.S. capacity by 2028 (from four plants) offers economies of scale, potentially lowering Nissan’s battery costs to $60–70/kWh, competitive with Tesla’s $50/kWh target.

BYD’s Shadow: A Threat to Global Ambitions

Nissan’s retreat from LFP production leaves it vulnerable to BYD, which now dominates LFP battery technology and is flooding Japan with sub-$30,000 EVs. BYD’s vertical integration—owning mines, batteries, and assembly—creates a cost advantage Nissan can’t match without its own LFP capacity.

BYD’s sales have grown 5x since 2020, while Nissan’s EV sales remain stagnant at 10% of its total output.

Risks: Delays, Dependency, and Overextension

The plan hinges on flawless execution. Key risks include:
1. Production Delays: SK On’s 2028 timeline for battery delivery aligns with Nissan’s EV launch plans, but delays (as seen in Tesla’s Cybertruck) could derail profitability.
2. Overreliance on SK On: A single supplier for critical batteries creates supply chain fragility. SK On’s parent, SK Innovation, has faced quality recalls in the past, raising reliability concerns.
3. Job Cuts and Brain Drain: Nissan’s plan to slash 20,000 jobs (15% of its workforce) risks losing R&D talent critical to EV innovation.

The Undervalued Opportunity: North America’s EV Gold Rush

Despite risks, Nissan’s bet on the U.S. market is shrewd. The Canton plant’s 400,000-unit annual capacity targets the world’s second-largest EV market, where demand is projected to hit 10 million units by 2030. Partnerships with SK On and Infiniti’s rebirth as an EV luxury brand could unlock premium pricing power.

Nissan/SK On’s $1.16 billion joint investment ranks among the top five U.S. battery projects, alongside Tesla/LG and Ford/Volkswagen.

Investment Thesis: Position for Recovery or Profit from Partners?

For Nissan (NSANY):
- Risks: Near-term losses, execution risks, and BYD’s price pressure.
- Upside: A $2.5 billion cost cut could return the company to profitability by 2026. The Canton plant’s tax-credit eligibility and NACS-charging compatibility (vs. Tesla’s CCS) could make it a sleeper hit.
- Entry Point: A P/B ratio of 0.5x suggests undervaluation relative to peers like Ford (0.8x).

For SK On (via SK Innovation, SKIXY):
- Risks: Overexposure to volatile EV demand and trade disputes.
- Upside: SK On’s 180GWh U.S. capacity positions it as a supplier to multiple automakers, including GM and Mercedes. Its high-nickel battery tech offers a performance edge over LFP.

Final Call: All In on the Pivot

Nissan’s strategic shifts are a high-stakes gamble—but one with asymmetric upside. If the Canton plant and SK On partnership deliver on cost and scale, the company could regain its footing in the EV race. Investors seeking resilience should:
1. Buy NSANY at current depressed valuations, targeting a 12–18 month horizon.
2. Pair with SKIXY for exposure to battery demand without Nissan’s operational risks.
3. Avoid overconcentration: BYD’s dominance in LFP and cost leadership make it a better play for pure EV plays, but its volatility requires caution.

The EV revolution isn’t for the faint-hearted. For those willing to bet on Nissan’s pivot, the reward of a reinvigorated automaker—and a key supplier in SK On—could eclipse the risks. The road ahead is uncertain, but the stakes are too high to ignore.

Disclosure: This article reflects analysis of public data and is not financial advice. Consult a professional before investing.