Nissan may be rethinking battery strategy

PARIS - Nissan boss Carlos Ghosn is preparing to cut battery manufacturing, people familiar with the matter said, in a new reversal on electric cars that has reopened deep divisions with alliance partner Renault.

The plan, which faces stiff resistance within the Japanese carmaker, would see U.S. and British production phased out and a reduced output of next-generation batteries concentrated at its domestic plant, sources said.

In what may also prove a politically sensitive blow to Japan Inc., Nissan would follow Renault by taking cheaper batteries from South Korea’s LG Chem for some future vehicles, including models made in China.

“We set out to be a leader in battery manufacturing, but it turned out to be less competitive than we’d wanted,” said one executive on condition of anonymity. “We’re still between six months and a year behind LG in price-performance terms.”

A decision on the Nissan battery plants in Sunderland, England, and Smyrna, Tennessee, is due next month, the sources said, following a tense procurement review with 43.4 percent shareholder Renault, the smaller but senior partner in their 15-year-old alliance.

Renault-Nissan “remains 100 percent committed to its industry-leading electric vehicle program” and has no plans to write down battery investments, spokeswoman Rachel Konrad said.

But Nissan is negotiating with manufacturing partner NEC Corporation on the shift to dual sourcing, with Chief Executive Ghosn’s backing, the sources said. Nissan currently makes all its own electric car batteries.

One option being explored would see LG, which supplies some Renault models, invest in its own battery production at one of the overseas Nissan plants as the carmaker halts operations at the sites.

The alliance is also in talks with LG on a deal to supply batteries for future Renault and Nissan electric models in China, a sources added.

NEC and LG declined to comment.

Reuters