Bloomberg News

Nissan to Use U.S. Battery Plant for Hybrid Vehicles

January 15, 2013

Nissan Motor Co. (7201) plans to better utilize a Tennessee battery plant making components for the slow-selling Leaf electric car by having it also supply parts for the company’s hybrid vehicles, an executive said.

The Smyrna, Tennessee, factory, funded with a $1.4 billion Energy Department loan, opened late last year to make Leaf’s lithium-ion batteries, motors and other components. U.S. sales of the rechargeable car have missed Nissan’s target for the past two years, staying below 10,000 units. The factory, next to Nissan’s largest U.S. auto-assembly plant, was intended to eventually supply packs and parts for 200,000 vehicles annually.

“It’s a damned expensive plant, so we want to use it as much as possible,” Andy Palmer, Nissan’s executive vice president, said in an interview in Detroit yesterday. “You’ll start to see front-wheel drive hybridized vehicles coming in the next one to two years.”

The push by Nissan, General Motors Co. (GM:US) and other carmakers to spur a big market for rechargeable vehicles has been hampered by the higher costs of such models and, in the case of the battery-only Leaf, the need for more public chargers. Nissan Chief Executive Officer Carlos Ghosn said this week at the North American International Auto Show his ambitious sales goal for Leaf reflected “passion” for the product, not “arrogance.”

Leaf sales in the U.S. rose 1.5 percent last year to 9,819, less than half of Ghosn’s 20,000-unit target. He previously estimated electric vehicles would account for at least 10 percent of global auto sales by 2020, a view not shared by other large carmakers.

U.S. Loans

The loans to Nissan, Ford Motor Co. (F:US), Tesla Motors Inc. (TSLA:US) and Fisker Automotive Inc. in 2009 from the Energy Department’s Advanced Technology Vehicle Manufacturing program, were intended to increase production of more fuel-efficient cars and trucks in the U.S.

Nissan was awarded $1.6 billion in loans, and eventually used only $1.4 billion for its Tennessee project. The Yokohama, Japan-based company was second only to Ford, which got a $5.9 billion loan. Nissan has emphasized the fact that Smyrna would make parts for all-electric cars.

William Gibbons, an Energy Department spokesman, said the agency doesn’t comment on specific loan agreement provisions.

Nissan, the world’s top seller of electric cars, this week cut the U.S. base price of Leaf to $28,800 with the new S grade of the hatchback, $6,000 below the previous entry level model. Prices were also lowered for SV and SL grade Leafs. Production of the car, which qualifies for a $7,500 federal tax credit, began in Tennessee this month.

‘The Vanguard’

Batteries and parts made in Smyrna are to be used in the electric Nissan NV200 model, a small commercial vehicle, starting this year, and for the Infiniti LE electric sedan that goes into production in 2014, Palmer said.

Hybrid versions of the Pathfinder crossover and Altima midsize sedan, also built at the Smyrna vehicle-assembly plant, are “in the vanguard” of being supplied by the battery factory, he said. The company hasn’t yet announced production plans for those projects, Palmer said.

Ghosn said this week in Detroit that global Leaf sales will grow in 2013, aided by the lower prices.

“You can expect them to be up,” Ghosn told reporters Jan. 14 in Detroit. “It would be fair to say” that Leaf should post at least a 20 percent increase, he said.

Nissan’s U.S. headquarters are in Franklin, Tennessee.

To contact the reporter on this story: Alan Ohnsman in Detroit at aohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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