(Lee Seung-hoon)
Japanese automakers are facing mounting pressure from the prolonged global electric vehicle slowdown, forcing them to scale back or revise ambitious EV production plans and raising concerns for South Korean battery makers tied to their projects.
Although demand for electric vehicles has shown signs of recovery since the Middle East conflict in March drove renewed interest in energy-efficient transportation, the rebound has been slower than expected. Japanese automakers, criticized for responding too slowly to shifting market conditions, are now reworking factory investments and electrification strategies.
According to sources on Monday, Nissan Motor has halted plans to manufacture EVs at its Canton, Mississippi plant and is expected to unveil a new electrification strategy later this year. The revised strategy is likely to shift focus from large electric vehicles to smaller and midsize models, which have shown relatively stronger sales performance.
Nissan had announced in 2022 that it would invest $500 million in the Canton plant to produce EVs, but later decided to suspend the project.
The move has drawn attention because a South Korean battery supplier had been selected to provide batteries for vehicles planned at the factory. SK On announced last year that it would supply 99 gigawatt-hours of high-nickel batteries for four next-generation Nissan EV models between 2028 and 2033, enough to power about 1 million midsize electric vehicles. Industry estimates valued the deal at around 15 trillion won ($10.3 billion).
SK On’s batteries are expected to be redirected to Nissan’s newly revised EV lineup, but concerns remain that major changes to customer production plans could increase uncertainty surrounding the contract.
Honda Motor has also indefinitely suspended plans to build an EV and battery production complex in Ontario, Canada. The company had announced a 15 billion Canadian dollar investment in 2024 with the goal of beginning operations in 2028.
The decision is expected to affect South Korean partners including POSCO Future M and LG Energy Solution.
POSCO Future M and Honda had originally agreed to establish a cathode materials joint venture in Canada, but Honda’s indefinite suspension of the factory project has forced the two companies to seek alternative cooperation plans.
Honda also plans to repurpose its battery plant joint venture with LG Energy Solution in Ohio for hybrid vehicles or energy storage systems instead of EV-only production.
Industry officials said Japanese automakers lacked the flexible response strategies shown by rivals such as Hyundai Motor Group, which expanded hybrid vehicle sales to cushion the impact of the EV slowdown.
Toyota Motor is also facing delays in building a battery plant in Fukuoka, Japan. Toyota had planned to begin production at the facility in 2028, but slowing EV demand has delayed construction progress.
While Toyota’s delays are not directly tied to South Korean battery suppliers, industry officials view the weaker outlook for Japanese EV demand as a broader negative signal for the battery sector.
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