Nissan Rescues Ailing PHEV Maker Mitsubishi

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In a deal that could help bolster marketing and sales of the Outlander plug-in hybrid SUV when its hits the U.S. market this fall, Nissan has agreed to take a controlling stake in ailing Mitsubishi Motors. Mitsubishi builds the Outlander and the i-MiEV electric town car.

Nissan, which has one electric car and big hopes to lead the automotive world in vehicle electrification, said it will  acquire a 34 percent stake in Mitsubishi Motors.

The $2.18 billion dollar deal brings Mitsubishi into the Renault-Nissan Alliance and would give it a much-needed cash infusion just months before Mitsubishi is scheduled to begin marketing the Outlander PHEV in the U.S.

The gas-electric  SUV  already is a best-seller in Europe and Asia.

Carlos Ghosn, the charismatic chairman of both Renault and Nissan and something of a folk hero in Japan for his rescue of a failing Nissan more than a decade ago, said that joint operations in research, development, parts purchasing and sales and marketing would save billions of dollars for the three companies.

Mitsubishi’s long history of electric vehicle development, along with it’s the popularity of its vehicles in Southeast Asia, make it an attractive addition to the alliance.

In addition to its commitment to electric vehicles – its battery-electric Leaf hatchback, launched in 1201, was the first modern mass-produced BEV, Nissan been attempting to grow market share Southeast Asia.

Mitsubishi’s falling stock price made the deal particularly attractive and, perhaps not coincidentally, it was Nissan that triggered the stock slump.

The two companies had been jointly developing microcars with tiny engines when Nissan engineers complained to Japanese regulators that they’d discovered that Mitsubishi was inflating fuel efficiency figures for the cars, which are popular in Japan.

Mitsubishi later acknowledged that it had been inflating mileage claims for its microcars for nearly 25 years.

As in the U.S., Japanese regulators allow automakers to perform their own fuel economy tests using procedures approved by the government. Mitsubishi admitted last month that it had been using an unapproved procedure that inflated fuel efficiency results for cars in its Japanese market lineup.

That admission caused the company’s stock price to drop by almost 50 percent. And that made it a pretty good acquisition target for the Renault-Nissan alliance.  Nissan’s 34 percent stake would make Mitsubishi’s larger single shareholder and, under Japanese law, give it operating control of the company.