NISSAN MOTOR CO., LTD.

Sharp fluctuations in energy prices and global supply chain disruptions stemming from US tariff policy and the situation in the Middle East are significantly changing the business environment. There is a risk that substantial increases in manufacturing and logistics costs, as well as demand fluctuations, will directly impact business performance. The Group makes forecasts as accurate as possible and implements necessary countermeasures, but the outlook remains extremely difficult to predict.

Technological innovation in CASE, SDV, and AI may lead to the widespread adoption of car sharing, ride sharing, and robo-taxis, potentially bringing about major transformation of the conventional business model of manufacturing and selling cars as hardware. As the center of added value in automobiles shifts from hardware performance to software-based services and experiences, the value of the Company's traditional strengths in hardware development and mass-production know-how may decline. In addition, intensifying competition to develop new technologies could increase the burden of development costs and vehicle costs, potentially having a significant impact on business performance and financial condition.

The Group produces vehicles in 13 markets worldwide and sells them in approximately 160 markets, and since its consolidated financial statements are presented in yen, yen appreciation adversely affects business performance. Although the Group takes measures such as localizing production and purchasing in foreign currencies, it is not possible to completely eliminate exchange rate risk, and fluctuations exceeding expectations could impact business performance and financial condition.

The Company's long-term unsecured credit rating has already been downgraded by domestic and overseas rating agencies, and further downgrades could increase liquidity risk. The Group responds through measures such as maintaining committed credit lines and cash on hand, and securitizing financial receivables, but if unexpected large-scale changes occur in market conditions, or if additional credit rating downgrades occur, this could hinder fundraising as originally planned.

Marelli Holdings Co., Ltd., a key supplier, filed for civil rehabilitation proceedings in June 2022, and in June 2025 commenced Chapter 11 proceedings under the US Bankruptcy Code in the US Bankruptcy Court for the District of Delaware. If a suspension, delay, or shortage of supply from this company occurs, it could lead to production stoppages, delays or reductions in production, and increased financial burden and costs for the Group, potentially having a significant negative impact on business performance and financial condition.

Tightening greenhouse gas emission regulations and the accelerating transition to carbon neutrality in various countries could impact business performance and financial condition if the Group's response is delayed. The Group has declared its aim to achieve carbon neutrality by 2050 and has formulated the "Nissan Green Program 2030 (NGP2030)," setting a target of reducing CO2 emissions per new vehicle by 50% in major regions by 2030 compared to 2018 levels. However, if society's overall climate change countermeasures progress or regress beyond expectations, increased costs to address transition risk and physical risk, as well as declining sales volumes, could have a significant impact on financial condition.

The adoption of new technologies may later give rise to unforeseen quality issues such as product liability and product recalls, and as autonomous driving technology becomes more widespread, manufacturers may be held more accountable. If a large-scale recall occurs, it would not only incur substantial costs but could also damage brand image, potentially having a significant impact on business performance and financial condition. The Company holds insurance for product liability up to a certain limit, but not all damages are necessarily covered by insurance.

Serious compliance issues have occurred in the past, including improper handling of vehicle inspections in 2017, misconduct by a former Representative Director in 2018-2019, and a recommendation from the Japan Fair Trade Commission in March 2024 based on the Act against Delay in Payment of Subcontract Proceeds. Although recurrence prevention measures continue to be implemented, since these issues involve the actions of all employees and officers, complete prevention of such incidents is difficult, and if a serious compliance violation were to recur, it could result in a loss of social trust, brand value, and confidence in products, potentially having an extremely significant impact on business performance.

Nearly all of the Group's operations depend on information systems, and man-made threats such as increasingly sophisticated cyberattacks and computer virus infections are rapidly intensifying. If a cyberattack beyond expectations were to occur, it could result in business suspension due to system downtime, loss of critical data, leakage of confidential information or personal information, and impacts on the supply chain. The Group implements measures such as formulating BCPs, updating aging systems, and strengthening cybersecurity measures, but it is difficult to completely eliminate this risk.

With the expansion of electrification and the introduction of new technologies, the use of rare metals such as lithium, cobalt, and nickel is increasing, and the Group is exposed to risks of rapid fluctuations in supply-demand balance, price surges, and supply tightness due to low production volumes, concentration of production in specific countries or regions, and sudden export restrictions. Global semiconductor supply tightness could also significantly affect production plans. The Group is working to improve BCP levels, consider alternative suppliers, secure inventory across the entire supply chain, and enter into long-term supply contracts with semiconductor suppliers, but unexpected changes in market conditions could make stable procurement difficult.