Nissan Builds Battery Plant for Electric-Car Boom

Nissan Motor Co. began building a battery factory next to its main North American auto-assembly plant to support Chief Executive Officer Carlos Ghosn’s expectation of surging U.S. demand for electric vehicles.

When it opens in 2012, the plant in Smyrna, Tennessee, will be able to supply lithium-ion battery packs for 200,000 electric cars a year, topping Nissan’s plan to build as many as 150,000 rechargeable Leaf hatchbacks there annually. Japan’s third- largest carmaker said today its $1.7 billion investment in Leaf and battery capacity in Smyrna, funded mainly by a $1.4 billion U.S. government loan, may add as many as 1,300 Tennessee jobs.

“What we’re doing here will radically transform the automotive experience for consumers,” Ghosn said. “Production of Nissan Leaf and lithium-ion batteries in Smyrna brings the United States closer to its goal of energy independence, creates green jobs and helps sustain American manufacturing.”

Ghosn, 56, has set a goal for Nissan and partner Renault SA, which he also runs, to lead an emerging market for electric autos as the U.S., Japan and Europe push automakers to cut oil consumption and carbon emissions tied to global warming. While General Motors Co., Toyota Motor Corp. and other rivals are readying their own rechargeable models, none has a goal of matching Ghosn’s sales target of as many as 500,000 electric cars a year by 2012.

Nissan will gain economies of scale to reduce costs when it reaches that level, Ghosn told reporters today.

“I don’t see this as a risk. I see this as a huge opportunity,” Ghosn said at an event at the factory. “When we get to 500,000, 1 million units, we don’t need government support.”

‘Wildly Optimistic’

GM aims to build 45,000 of its Volt plug-in cars, which also use gasoline, annually by 2012. Toyota hasn’t set volume targets for either its plug-in Prius hybrid or “urban commuter” minicar that arrive in the U.S. in 2012.

“Sales of 500,000 vehicles by 2012 is just wildly optimistic,” said KG Duleep, a Washington-based analyst for ICF International who helps the National Academy of Science and U.S. agencies with advanced automotive technology. President Barack Obama has set a goal of getting 1 million plug-in and battery vehicles on U.S. roads by 2015.

Ford Motor Co. on May 24 said it’s investing $135 million and adding 220 jobs at three Michigan facilities to help it introduce five models powered wholly or in part by electricity by 2012.

Global Capacity

With Nissan’s new factory and others announced by U.S. auto and battery makers, by 2012 the country will have about 20 percent of forecasted global capacity to produce advanced batteries, Daniel Poneman, U.S. deputy secretary of energy, said today at the Smyrna site.

“By 2012, factories like this one will be shipping tens of thousands of electric vehicles to showrooms around the world,” Poneman said. The Obama administration so far has committed $12 billion to advanced vehicle technologies, he said.

The first shipments of Yokohama-based Nissan’s Leaf, capable of traveling as far as 100 miles solely on battery power, will arrive late this year in the U.S. and Japan. Nissan has said it expects U.S. tax credits and rising fuel prices to spur demand for the $32,780 car, which will cost $25,280 after U.S. subsidies.

Nissan last year was awarded an Energy Department loan of as much as $1.6 billion for “advanced technology” vehicle production in the U.S. The company has since modified its loan application, eliminating an initial plan to make electrodes for the batteries and leaving the production to Japan’s NEC Corp., Mark Swenson, Nissan’s vice president of North American manufacturing, said in an interview today.

“We still hope to do that eventually, but for now the electrodes will be supplied by NEC in Japan,” he said.

Nissan’s North American unit is based in Franklin, Tennessee.

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