Nissan's Electric-Car Battery Future: Will It Be With LG Chem?

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Nissan is set to close electric-car battery plants in England and the U.S. and turn to Korean maker LG Chem for some batteries.

Or perhaps not.

A startling and exclusive Reuters report yesterday said that Nissan is in the middle of reassessing its plans for electric-car production and global battery sourcing as it prepares for the launch of a second generation of plug-in vehicles.

Reuters claims that Nissan will shutter its battery plants in Smyrna, Tennessee, and Sunderland, England, to provide lithium-ion battery packs for electric cars built in those countries from its home plant in Oppama, Japan.

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More remarkable, Nissan plans to buy at least some lithium-ion cells from LG Chem, which leads Nissan by six months to a year on cell cost, according to Reuters.

LG Chem has done well in the battery business, claiming that it will build cells for a 200-mile electric car to be launched in 2016.

2015 Nissan Leaf

2015 Nissan Leaf

All Nissan electric vehicles to date--namely the Leaf hatchback and the e-NV200 small delivery van--have used batteries from AESC, a joint venture between Nissan and giant Japanese electronics company NEC.

The report suggests that Nissan CEO Carlos Ghosn has concluded that electric cars will grow more slowly and be tougher to sell than expected. The headline included the phrase "electric car hopes fade."

Reuters asserts that the company's contract with NEC required it to buy electrode material for set levels of battery production regardless of whether those cells were fabricated or not.

It says the plan has generated substantial controversy, from factions within Nissan who oppose it and from alliance partner Renault.

The French carmaker had pioneered the move to LG Chem cells because they were cheaper--making Nissan's cost problem with NEC even worse due to lower volume.

2013 Renault Zoe electric car (European model) at 2012 Paris Auto Show

2013 Renault Zoe electric car (European model) at 2012 Paris Auto Show

AutoblogGreen obtained a statement from Rachel Konrad, spokesperson for the Renault-Nissan Alliance, that in essence said that Nissan had not made any decisions on its future battery plans.

"The Renault-Nissan Alliance remains 100 percent committed to its industry-leading EV program," Konrad wrote. "This global commitment continues for the foreseeable future."

Still, the departures of three key Nissan executives associated with its electric-car efforts--most notably product chief Andy Palmer, now CEO of tiny British sports car maker Aston Martin--may indicate internal conflict over the future of the carmaker's electric-vehicle plans.

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CEO Ghosn has long since backed away from his prediction that 10 percent of Nissan's 2020 sales would be electric cars. While the Nissan Leaf is by far the world's best-selling electric car, its U.S. sales remain at less than one-quarter of local production capacity for the car.

LG Chem, meanwhile, has been working with alliance partner Renault on batteries for next-generation cars with ranges up to 180 miles. It also recently announced that Volkswagen Group would buy its batteries for future plug-in cars as well.

If Nissan plans to look outside AESC for batteries, LG Chem would seem to have been the leading candidate.

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