TOKYO — Mitsubishi Motors Corp. is weighing possible investment in an electric vehicle spinoff that French partner Renault wants to float as a new future-looking subsidiary.
CEO Takao Kato said the Japanese carmaker had received an overview of Renault’s plan and was considering possible participation but cautioned that deliberations had only just begun.
“We are studying the outline. But at this moment, we have yet to examine this matter in greater detail as to whether we will decide to make an investment,” Kato said Wednesday in announcing the company’s quarterly financial results. “This matter will call for an understanding of our shareholders and board members. It is not something we can decide in a short time.”
Renault, in an effort to streamline itself for the EV age, intends to cleave off its EV and internal combustion operations into two separate entities. It seeks capital partners for both.
Mitsubishi has a loose partnership with Renault as the third leg of the Renault-Nissan-Mitsubishi alliance. Renault and Nissan Motor Co. have cross-shareholdings in each other. Nissan loops Mitsubishi into the three-way tie-up through its controlling 34 percent stake in the smaller Japanese automaker.
Renault and Mitsubishi don’t have any cross-shareholdings.
Nissan has already said it is considering investing in the EV spinoff, code-named Ampere, and people familiar with the ongoing talks have said Nissan is considering a stake of up to 15 percent.
Kato said Mitsubishi has no idea what size investment it might consider in the company.
The EV entity is largely focused on the European market, which plans to go zero emissions in 2035. Mitsubishi’s presence in Europe is small; it plans to sell just 66,000 vehicles there this year.
But being an EV player is essential to staying in the market long term, Kato said, adding that receiving rebadged EVs from Renault on an OEM basis is one possibility.
Renault and Mitsubishi are collaborating on building internal combustion cars for sale in Europe. Renault will build two cars for Mitsubishi, a new Colt small car based on the Renault Clio and the ASX, which is based on the Renault Captur small SUV.
Mitsubishi expects European annual sales to be 40,000 for the Colt and 35,000 for the ASX. The automaker will continue to sell established models such as the Eclipse Cross SUV.
While Mitsubishi helped pioneer the electric vehicle market more than a decade ago with the now-discontinued i-MiEV minicar, today it is largely flatfooted for the EV shift. In Japan, it sells an EV minicar co-developed with Nissan, but plug-in hybrids remain its main focus for electrification.
EVs for U.S.
In the U.S., for example, Mitsubishi just introduced the redesigned version of its Outlander PHEV. Executive Vice President Hiroshi Nagaoka said more electrified offerings will be needed for the U.S. market later this decade to fulfill zero-emissions regulations there as well.
“We won’t be able to do business in the U.S. unless we introduce models including BEVs,” Nagaoka said. “We are now working out plans for that, and we are aware we have to offer a broader range of electrified vehicles.
Word of Mitsubishi’s consideration of the EV spinoff plan comes as the Japanese company rocketed to recovery in the latest quarter and upgraded its fiscal year profit outlook.
Kato warned that Mitsubishi doesn’t see the global microchip shortage being fully resolved until the first half of 2024 and that there are still production interruptions.
But Mitsubishi is coping better.
In the fiscal second quarter that ended Sept. 30, expanding sales, more profitable pricing and a big foreign exchange rate gain powered profits at Mitsubishi.
Operating profit more than tripled to 53.8 billion yen ($372.3 million) and net income more than doubled to 44.1 billion yen ($240.4 million) in the three-month period.
Global wholesale deliveries expanded 4.9 percent to 257,000 vehicles in the quarter, with North America, Japan and Southeast Asia offsetting slumping deliveries in Europe.
Looking ahead to the current fiscal year ending March 31, 2023, Mitsubishi lifted its profit outlook despite cutting its global sales target. Even though volume is expected to come in below early forecasts, higher pricing power and beneficial currency trends will boost the bottom line.
Mitsubishi now expects operating profit to climb to 170.0 billion yen ($1.18 billion) for the full fiscal year, up from 87.3 billion yen ($604.1 million) in the previous period. Worldwide retail sales are expected to slide 3 percent to 908,000 vehicles, from 937,000 the year before.
Mitsubishi predicts that North American sales will decline 7 percent to 145,000 vehicles this fiscal year. Sales in Europe, by contrast, should crater 45 percent to 66,000 vehicles.
— Peter Sigal contributed to this report.
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