TOKYO (Reuters) -Nissan Motor will produce electric vehicles for its Chinese joint-venture partner Dongfeng Motor at its Wuhan factory by year-end, the Nikkei newspaper reported on Tuesday, a sign of pressure on the automaker's China business.
By producing EVs for Dongfeng, Nissan (OTC:NSANY) aims to reduce fixed costs and increase the operating rate of the factory, which has been declining because of slumping sales, Nikkei said.
Nissan and Dongfeng did not immediately respond to comment requests.
Japan's third-biggest automaker has already been making the Ariya EV and the X-Trail SUV through its joint venture with Dongfeng at the plant, which has an annual production capacity of 260,000 vehicles, Nikkei said.
The plant will begin production of Dongfeng's new Zhiyin EV that belongs to its Voyah brand, Nikkei added.
Nissan operates eight factories in China through its JV with Dongfeng. It halted production at one of those plants last week, saying at the time it remained committed to the world's biggest auto market.
Nissan and rival Japanese automaker Honda (NYSE:HMC) Motor have been hit particularly hard in China by consumers' shift to low-priced, software-loaded cars produced by a wide range of local brands, including BYD (SZ:002594).
The rapid roll-out of battery-powered vehicles by Chinese car makers is not only proving hard for Nissan and other Japanese automakers in China, but also poses a growing challenge to them in other regions, such as Southeast Asia and Europe.