Nissan is reducing its petrol car output and shifting Nissan EV production for China towards battery electric vehicles and plug-in hybrids, after the surge in new energy vehicle sales in China, the world's biggest automotive market, moved faster than the company had anticipated amid a fierce price war.

Why Nissan is shifting production

The carmaker's Chinese range, led by the Sylphy family of saloon cars, is too heavily associated with petrol engines, leaving it exposed as buyers switch to electrified models. In response, Nissan is cutting local production in China and ramping up its N series of electric or plug-in hybrid models.

"China remains our biggest challenge," said Ivan Espinosa, Nissan's chief executive.

Sales decline and lowered forecast

The pressure in China has shown up in Nissan's numbers, forcing the company to lower its expectations for the year.

• •Sales across China fell by 22% in the first half of the year.
• •Pressure intensified from July through October, leaving sales down 32% in the first nine months of the year.
• •Nissan now expects to sell between 2.97m and 3m cars this year, down from a previous forecast of 3.15m, mainly due to its struggles in China.
• •Sales have increased in Japan and North America, regions where the move to electric cars has been slower.

China's subsidies and the EV market

The strength of electric car sales in China sits behind Nissan's difficulties. The country's government gave weighty subsidies to its electric car industry, having spotted an opportunity to overtake other countries such as Germany, Japan and the US in car sales.

Ripple effects for Sunderland

The shift reaches Nissan's only European factory, in Sunderland in northern England. In the UK the company has lobbied to weaken the zero-emission vehicle mandate, a target for increasing EV sales, and to keep selling petrol cars after 2035.

The British used electric car market is meanwhile growing quickly. Ian Plummer, chief customer officer at Autotrader, said retail sales of electric vehicles were "up an eye-popping 56% year on year in October", accounting for one in 10 retail sales.

Espinosa said he hoped Sunderland and Japanese products would be included in proposed EU 'Made in Europe' rules, which as drafted would exclude all of Nissan's cars from subsidies and other incentives within the EU.

For now, the company is pushing ahead with its production cuts in China and its N series expansion, while seeking a place for Sunderland in the EU rules that would otherwise leave its cars outside European incentives.