Mitsubishi Motors will No longer Produce Vehicles In China

Mitsubishi Motors plans to launch 16 new models over the next five years. Twelve will be launched in the Southeast Asian region, of which seven will be electric vehicles. © Reuters

Mitsubishi Motors, a Japanese automaker, announced Tuesday that it would stop producing cars in China because it was unable to keep up with the country's swift transition to electric vehicles.

The manufacturer reported a 24.3 billion yen ($162 million) "extraordinary loss" for the fiscal year ended March 2024 and announced it will restructure its joint venture with Guangzhou Automobile Group.

The business announced Tuesday that "Local production of Mitsubishi brand vehicles in China will be terminated." According to the statement, Guangzhou Automobile Group would fully buy the joint venture and use the production capacity for its Aion brand of electric vehicles.

According to a PwC analysis, 20% of new automobiles sold in China last year were electric vehicles, compared to 15% in Western Europe and 5.3% in the US.

In Japan, the auto industry still mainly prefers hybrid vehicles to electric vehicles. According to Mitsubishi, "The shift to electric vehicles is accelerating faster than anticipated in China, and consumers are rapidly experiencing significant changes in their brand and segment choices."

The company claimed that despite its best efforts to restore momentum in China last year, it 'continued to fall short' of its goal. The end result of Mitsubishi's struggles in China was the suspension of its factories there in March. On Tuesday, the board of directors decided to give up on a restart and "fundamentally review our China strategy."

The electric car division of its French partner Renault, Ampere, will get up to 200 million euros ($213 million) from Mitsubishi, according to a separate announcement made earlier in the day.

In order to "extend its line-up of EV" and "further improve its EV development technology," the investment was stated to be necessary. Although Japan sold a record number of new EVs last year—59,000—a threefold increase over the year before, EVs still accounted for fewer than 2% of all new car sales there.