Will Mitsubishi’s Tie-Up With Nissan Strengthen Its Plug-in Car Ambitions?

Plug-in electrified vehicle enthusiasts may want to keep an eye on Mitsubishi’s bold plans to proffer many more cars to their liking this decade into next.

Mitsubishi has been uniquely one of the most bullish and early on purveyors of electrified cars having introduced the i-MiEV in 2009 ahead of the 2011 Nissan Leaf, while simultaneously hamstrung with limited resources, but that all may be coming to an end.

With its recently finalized tie-up with Nissan, which purchased a controlling 34-percent stake, entering Mitsubishi into Renault-Nissan Alliance, while installing Alliance CEO Carlos Ghosn as chairman, Mitsubishi is carrying forward with relatively aggressive electrification plans.

In 2013, the carmaker – which was riding along in limp-home mode in the marketplace with a weak North American presence and dealer network – announced it would revive its global lineup aiming to make 20 percent of vehicles sold plug-in by 2020.

That timeline and percentage was ahead of its time, and only now are Europe’s much larger automakers – forced by regulations – catching up to Mitsubishi’s vision it proactively embraced in terms of percentage of sales into next decade.

But of course announcing a makeover and making it so were two different things for the lower volume, and beleaguered company.

Mitsubishi's i-MiEV - an early on production EV.

Mitsubishi’s i-MiEV – an early on production EV.

With the new agreement last week, Nissan has committed nearly six-times the R&D funds toward revamping Mitsubishi’s product line-up, and while a knife is being taken to certain costs, there is no word that electrification is experiencing any significant cuts.

Ghosn, in characteristic fashion, has promised big things to come for the formerly handicapped Japanese brand.

The move put a few key Nissan board members on Mitsubishi’s downsized board as part of strict reorganization plans, while retaining Mitsubishi President Osamu Masuko who spoke with hopefulness of the Alliance connection.

“We are a full member of the Renault-Nissan alliance from today,” said Masuko last Thursday in Tokyo alongside Ghosn to herald the company’s new lease on life. “We look forward to learning a lot of things from Nissan. We intend to accelerate our progress and come as close as possible to where Nissan is today. The investment by Nissan Motor will certainly contribute significantly to our company’s sustainable growth.”

Digging Out of A Hole

Analysts are not predicting anything so drastic as an immediate new product line as of tomorrow, and challenges remain.

Among these are a corporate structure that turned a blind eye for 25 years to mild doctoring of mpg and emissions test results for 624,000 Japanese ”kei” cars including 468,000 built in partnership with Nissan and badged as such.

Consumer confidence has taken a hit as has the company’s already not-robust market position.

SEE ALSO: Mitsubishi President Says MPG Scandal Threatens Its Survival

Mitsubishi has shuttered its under-performing Normal, Ill. U.S. production plant, and Michigan-based analyst Alan Baum noted its U.S. dealer network is also an Achilles heel.

Mitsubishi's entire U.S. product assortment.

Mitsubishi’s entire U.S. product assortment.

Mitsubishi is stronger in Europe, and its entire U.S. lineup is a shadow of those of larger automakers. Its dealers are typically multi-brand as sales of just Mitsu products would not be enough to support the franchise.

Baum said a simple idea like putting new Mitsubishis into Nissan’s far-healthier dealer network may be easier said than done. Franchise laws vary state by state making that complicated, but he suggested that Nissan and Mitsubishi may try to use this new advantage.

This weak distribution and sales link otherwise is something Baum does not see being shored up any sooner than 2-3 years, if not longer – about the time it would take to introduce proposed new plug-in SUVs and other vehicle types, so that may be OK.

A Natural Alliance

As noted, Nissan and Mitsubishi have worked together for several years now, and the full-on resuscitation is being touted as the next step, initiated by Masuko and welcomed by Ghosn.

Nissan and Mitsubishi do stand to make a good team, and reasons transcend insular motives Americans may feel – as badly as some have been frustrated that the Outlander PHEV has been delayed to North America upwards of half a dozen times.

nissan-mitsubishi-acquisition

“The reason that Nissan is more interested in Mitsubishi than you might otherwise expect is that they are actually quite strong in Southeast Asia, which are growth markets in which Nissan is not as strong,” Baum said.

These markets, while at the moment in a down cycle, are seen as having upside potential. Markets, including Japan, and smaller ones that don’t even register for many thinking of global competitiveness otherwise are growing, and thus add up to something Nissan wants to ride into with Mitsubishi’s stronger presence.

Another unrelated but not irrelevant carrot for Nissan has been the Mitsubishi Group, Baum offered. This far larger, and more profitable business could be more approachable now for Nissan to do further deals with, thanks to its new marriage with Mitsubishi Motors.

“If Nissan can get a way into that, that’s raw materials, that’s trade, that’s transportation, and those are huge things,” said Baum, and no doubt ambitious Ghosn wearing his third CEO hat now has contemplated this, you can be sure. “Those are not actually part of this, but it does give the Alliance a way in.”

Mutual Savings/Sharing

Ghosn actually wrote a full-length editorial published by Automotive News (subscription) explaining the highlights and rationale of the buy in. In short, it is win-in, he said, and he is being taken seriously as one who in the late 90s revived ailing Nissan with the foundation of the Renault-Nissan Alliance.

Nissan’s up-front cost for its Mitsu stake was $2.28 billion (¥237 billion), and Ghosn outlined how this will help everyone – and customers most.

“We will be providing the strategic, operational and management expertise — and the capital investment — to ensure that Mitsubishi not only overcomes its immediate significant challenges but flourishes in the future,” he said.

Mitsubishi GT PHEV Concept.

Mitsubishi GT PHEV Concept.

Nissan reportedly will benefit also by gaining control of Mitsubishi’s Japanese kei car expertise, strength in pickups, and Mitsubishi’s plug-in hybrid systems are expected to be adopted by Nissan as well.

The tie-up could reportedly save Nissan $230 million (¥24 billion) in fiscal 2017, and increase to nearly $580 million (nearly ¥60 billion yen) per year beyond that, and Mitsubishi is also projecting substantial cost savings.

Mitsubishi’s entry to the Renault-Nissan Alliance also now makes it one of the top three global automakers, said Ghosn, who projects upwards of 10 million vehicles sold worldwide this year.

“Beyond scale advantage, we have already identified synergies with Mitsubishi that will benefit both our companies, focused on realizing synergies in joint purchasing, deeper localization, joint plant utilization, common vehicle platforms, technology-sharing and an expansion of our combined presence in both mature and emerging markets,” said Ghosn.

Looking Ahead

While those wanting immediate gratification – as in a slew of new models now – may have to wait, they might not have to wait overly long.

Masuko, who was already in the midst of morphing the company’s product line to more plug-in-intensive is reportedly staying on that mission and now this bullish company is merged with the also-bullish Renault-Nissan, which has broad plug-in plans of its own.

Outlander Sport PHEV.

Outlander Sport PHEV.

On the immediate horizon is the Outlander PHEV, which is supposed to be here sometime next year – and this time it may actually be.

Before Mitsubishi’s mpg cheating scandal hit in April this year, this had ranked as Europe’s top-selling PEV, and for the U.S. would represent the only all-wheel-drive plug-in hybrid SUV other than chic European models.

Other hopeful signs include that despite letdowns along the way, Mitsubishi never relegated cars like the i-MiEV to compliance car status.

Instead, it bravely sold this less-competitive converted kei car in all 50 states while a few other major automakers hung back in California ZEV markets.

Thus while obstacles remain, Mitsubishi has more than most had its heart in the right place with regard to plug ins.

Now with an infusion of wealth by marrying into a global top three maker, it stands to make good on old promises, and time will tell.