Nissan And Mercedes Part Ways In The US As Tennessee Factory Gets Shut Down

Aug. 25, 2022 3:48 PM ET by Jared Rosenholtz Engine / 1 Comment

The plant mostly made engines for Mercedes-Benz anyway.

Nissan currently operates four factories in the United States, they include two in Mississippi and two in Tennessee. According to Automotive News, the Japanese automaker will close the Decherd Infiniti Powertrain Plant, which previously manufactured the 2.0-liter turbocharged four-cylinder engine for the Infiniti Q50 until 2019, and the Mercedes-Benz GLE-Class and Sprinter and Metris vans. With 208 horsepower on tap, the four-cylinder once served as the Q50's base powertrain before the twin-turbo V6 became the only option for the 2020 model year.

"[We will] suspend operations at the powertrain facility in Decherd pending future product announcements," a Nissan North America spokesperson said. No jobs will be lost as the 400 workers will be reassigned to other facilities, which could include the company's plant in Smyrna, Tennessee, which assembles the Nissan Leaf.

The plant opened back in 2014 as part of a $319 million joint project between the Renault-Nissan Alliance and Daimler AG. Nissan's next-door Decherd engine and components plant, which builds engines for other Nissan/Infiniti vehicles, will remain open.

The Infiniti Powertrain Plant was built with a 250,000-unit annual capacity but only managed to hit 35% of its peak production in 2020. Last year, it only assembled 50,000 engines. Infiniti hasn't used the Mercedes-designed engine since 2019, and there isn't enough demand from Mercedes-Benz to keep the plant operational. The German automaker still used engines from Tennesee in its GLE, Sprinter, and Metris models but told dealers earlier this year that it would begin sourcing powertrains from other factories.

"The product cycle will end in the course of the next year. Production is running out according to plan, and the cooperation with Nissan in Decherd is ending," a Mercedes-Benz spokesperson said.

When this plant shuts down, it will end an unsuccessful partnership between Nissan and Mercedes, set up by disgraced former Nissan CEO Carlos Ghosn. We still remember the entry-level Infiniti QX30, a rebadged version of the Mercedes GLA-Class that lasted only three model years. The Infiniti Powertrain Plant was built to provide the four-cylinder engine for the Alabama-built Mercedes C-Class, but that car is now assembled in Germany.

Nissan and Mercedes still operate a joint-venture COMPAS plant in Mexico, though its future is still unclear. The Mexican plant currently assembles the Mercedes GLB-Class, Infiniti QX50, and QX55, but analysts don't expect production to last beyond 2026. Mercedes used to produce the A-Class there too but axed that model in favor of the more popular GLB.

Nissan could repurpose the Decherd plant to build EV powertrains and batteries as part of its $18 billion effort toward electrification. The Nissan Ariya EV will soon arrive in the US market after numerous delays but will no longer qualify for a $7,500 tax credit because it's built in Japan. President Biden recently signed the Inflation Reduction Act into law, stipulating that EVs must be assembled in North America to receive the credit. If Nissan can retool this factory for Ariya production, it could make the car more affordable for EV shoppers.