Nissan has begun building a battery factory next to its main North American auto-assembly plant as Chief Executive Officer Carlos Ghosn predicts US demand for electric vehicles will surge. He has set a goal for Nissan and its biggest shareholder Renault SA, which he also runs, to lead the market for electric autos, as the US, Japan and Europe push automakers to cut oil consumption and carbon emissions tied to global warming.

By Alan Ohnsman for Bloomberg (217 May 2010):

Nissan Motor Co. began building a battery factory next to its main North American auto-assembly plant as Chief Executive Officer Carlos Ghosn predicts U.S. demand for electric vehicles will surge.

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

“‘We know that we are the most bullish on the market,” Ghosn, who predicts global electric-car sales may reach 500,000 a year by 2012, said yesterday. “What we’re doing here will radically transform the automotive experience for consumers.”

Ghosn, 56, has set a goal for Nissan and its biggest shareholder Renault SA, which he also runs, to lead the 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 matches Ghosn’s 2012 sales target.

Nissan will gain economies of scale to reduce costs when demand reaches the predicted level, Ghosn said.

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

Nissan has received 13,000 pre-orders in the U.S. for the Leaf, Ghosn said.

The automaker fell 2 percent in Tokyo to 634 yen as of 9:32 a.m., while the benchmark Nikkei 225 index dropped 0.7 percent. Nissan’s stock has declined 22 percent this year.

‘Wildly Optimistic’

Detroit-based 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 the plug-in version of its Prius hybrid, which will be available to U.S. retail customers from 2012, or the “urban commuter” electric minicar, set to arrive in the U.S. the same year.

“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. said May 24 it’s investing $135 million and adding 220 jobs at three Michigan facilities to help the Dearborn, Michigan-based company 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 forecast global capacity to produce advanced batteries, Daniel Poneman, U.S. deputy secretary of energy, said yesterday 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.

Energy Department Loan

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 yesterday.

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

About 70 percent of employees being added in Smyrna will be for the battery plant, with the rest going to work on the Leaf assembly line, Swenson said.

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

Australia’s 2010 Electric Vehicle Conference will be held in Brisbane on 21 October.

Source: www.news.businessweek.com and www.evconference.com.au