Japanese automaker Mitsubishi Motors will stop producing its cars at its joint venture in China and will transfer its stake in the unit to its Chinese partner.
In a statement released on Tuesday, the company announced that it will invest up to €200m ($212m) in Ampere, Renault’s new electric vehicle (EV) unit, to strengthen its foothold in Europe and other markets.
As a result of the restructuring plans, Mitsubishi will take a $162.4m loss in its current financial year. However, company officials made no change to the full-year earnings forecast.
“As the first step in our collaboration, we plan to receive OEM supply of EVs from Ampere in the European market,” the statement reads.
For Renault, the new deal with Mitsubishi follows a successful year in terms of partnerships. In July, the France-based car manufacturer teamed up with its Chinese counterpart Geely, announcing plans to invest $7.71bn in a joint venture that will be headquartered in the UK.
Despite this, news about the move comes amid a profitable financial year for Mitsubishi. In its annual report published in March 2023, Mitsubishi Global reported revenues worth $144bn, marking a 25% increase from 2022 ($115.3bn).
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However, recent events, including tougher competition from China’s EV market coupled with growing tension between Western countries and Beijing, have led Mitsubishi to restructure its global supply chains.
The company added that it will address the current market concerns in its Midertm Corporate Strategy for 2024. The strategy seeks to “create significant shared value, MCSV, by elevating the Mitsubishi Corp (MC) Group’s collective capability in order to address societal changes”, according to Mitsubishi’s 2023 annual financial report.
China is quickly becoming a leader in the EV market, with businesses capitalising on strong state-backed funding. According to AlixPartners, a consulting firm, Chinese state subsidies for electric and hybrid vehicles reached $57bn between 2016 and 2022.