Mitsubishi Agrees to Make 100,000 Electric Vehicles for Peugeot

Extra production should bring down Mitsubishi’s costs per EV

By Brendan Moore

03.09.2010

Mitsubishi Motors has agreed to produce 100,000 vehicles for PSA/Peugeot-Citroen starting in October of this year, with the vehicles scheduled to be offered for sale before the end of the year.

Mitsubishi will manufacture the cars at its plant in Mizushima, Okayama Prefecture, Japan. The PSA-branded vehicles will be based on Mitsubishi’s four-seat i-MiEV, which, after a long lead-up, finally goes on sale for the masses next month in Japan. The i-MiEV is scheduled to be offered in Europe by year’s end and in the United States in the second quarter of 2011.

The cars manufactured for PSA will get different body styling, interiors, and will have handling and suspension characteristics. The vehicle will be sold under the iOn brand by Peugeot and under C-Zero by Citroen. PSA plans to sell 25,000 EVs a year, with half of the total going to each of it’s two brands.

The announcement came right after the Japanese and French automaker ended discussions last week over a potential investment in Mitsubishi by PSA. Peugeot decided against the investment partly out of concern that taking the stake in the money-losing Mitsubishi would damage the French company’s debt ratings, Chief Executive Officer Philippe Varin said last week.

Today’s announcement stated they will instead focus on expanding a five-year partnership that includes shared SUV production and a planned Russian factory. The current cooperation over the small SUV model has been successful from both companies’ perspectives.

Peugeot wants to have a zero-emissions vehicle in its lineup as the EU corporate emissions requirements keep getting tougher to meet, and Mitsubishi would like their development and production cost for their EV spread out over a larger production total. Boosting volume will help bring down costs of the expensive lithium-ion batteries in electric vehicles. There are many companies planning to roll out electric vehicles in the next couple of years and they all see volume as important to the profitability of their respective cars.

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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