Nissan Could Pull Plug on In-House EV Battery Production

Since the introduction of the Nissan Leaf, Nissan has been a leader in the development of electric vehicles, but it sounds like the Japanese automaker is on the verge of conceding battery development to third-party suppliers. Next month, Nissan is expected to announce a new plan that would cut in-house battery production to allow for more competitive prices.
2015 Nissan Leaf 1 photo
Photo: Nissan
A report from Automotive News says that Nissan faces growing costs and overcapacity at its three battery production plants due largely to partner Renault’s recent shift away from these batteries to a battery made by LG Chem as well as a “ruinous” contract with NEC Corp, a joint-venture currently building all of Nissan’s batteries in-house. These current NEC batteries have an estimated cost of over $300 per kWh, which is quite a bit more than the $200 per kWh that Nissan and Renault are targeting.

At its three battery plants in Zama, Japan; Sunderland, England; and Smyrna, Tennessee, Nissan has an annual battery production capacity of 220,000 units compared to the 67,000 electric vehicles its sells each year. This production gap might shrink some with a bigger push toward hybrids (according to the article) as well as the expected launch of an all-electric Infiniti due out in 2018 to help the automaker to compete with Tesla. Despite the shift away from developing its own batteries, the article quotes a Nissan spokesperson as saying that the automaker “remains 100 percent committed to its industry-leading electric vehicle program.”

The plan that Nissan CEO Carlos Ghosn will reportedly announce next month will halt battery production in the U.S. and the U.K. and have a reduced output in Japan. Such a move could cut 500 jobs from the Tennessee and England plants. Another plan might be to partner up with an outside supplier to fill this void, but that would require approval from NEC, which we assume would be hesitant to give up such control.
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