Nissan will cut battery manufacturing due to slow demand for electric cars

Article by Andrew Christian, on September 19, 2014

Nissan builds its own electric-vehicle batteries through a joint venture with NEC Corp. But since chief executive Carlos Ghosn is bent on reducing in-house battery making, the carmaker may soon order EV batteries from LG Chem or eventually from other suppliers. "We will have both, and I hope even more," Ghosn said.

While the joint venture – AESC – currently builds batteries for Nissan, Ghosn is also exploring an agreement wherein LG Chem would build power packs at the carmaker’s sites in the United Kingdom or the United States, a source told Reuters. Nissan’s plan entails phasing out production at its plants in the UK and in the US while cutting down output of next-generation batteries at its site in Japan, two alliance sources told Reuters.

The sources added that Nissan would follow the lead of alliance partner Renault in ordering cheaper batteries from LG Chem for some future vehicles. One executive at Nissan told Reuters that while the carmaker wanted to be a leader in battery manufacturing, such operations has become less competitive than initially planned.

He noted that AESC is still between six months and a year behind LG in price-performance terms. The sources disclosed that a decision on Nissan’s battery plants in the UK and the UK will be out in October, following a tense procurement review with Renault.

Another source said that while Renault would prefer to outsource its EV batteries, Nissan engineers would prefer to stay in-house. "The write-off costs are potentially huge," the source noted.

Alliance spokeswoman Rachel Konrad, however, said that that Renault-Nissan is still fully committed to its EV program and is not planning write down battery investments.

She remarked that the alliance has not made any decision over battery sourcing allocation. Despite the remarks, the sources told Reuters that Nissan is already in talks with NEC Corp. on the shift to dual sourcing.

Topics: nissan, electric car

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