Nissan, NEC to Build Battery Plant for Electric Cars (Update3)By...

Nissan, NEC to Build Battery Plant for Electric Cars (Update3)

By Naoko Fujimura
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May 19 (Bloomberg) -- Nissan Motor Co., Japan's third- largest automaker, will build a factory with NEC Corp. to make lithium-ion batteries in Japan for use in electric and gasoline- electric hybrid cars.

The two companies will spend 12 billion yen ($115 million) over three years for the plant in Kanagawa Prefecture to make lighter, more powerful batteries, they said in a joint statement today. The factory will produce 13,000 units a year initially and eventually have an annual capacity of 65,000.

Nissan is trying to catch up with larger rivals Toyota Motor Corp. and Honda Motor Co. in offering hybrid cars. Demand for more fuel-efficient vehicles is rising as the price of crude oil reached a record $127.82 per barrel in intraday trading on May 16.

``It's a key product for Nissan as electric cars may be able to win popularity amid higher fuel costs,'' said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo, which oversees $28 billion in assets.

Nissan will raise its stake in Automotive Energy Supply Corp., the battery venture, to 51 percent from 50 percent. NEC will hold 42 percent and subsidiary NEC Tokin Corp. will own the remainder, the statement said. The venture, established in April 2007, plans to sell batteries to other companies.

Electric Cars

NEC Tokin surged 18 percent to 318 yen at the 3 p.m. close of the Tokyo Stock Exchange. Nissan rose 0.4 percent to 979 yen. NEC fell 1.5 percent to 530 yen.

``The ultimate solution for sustainable mobility lies in zero-emission vehicles,'' Nissan Executive Vice President Carlos Tavares said at a press conference in Tokyo. ``Electric cars represent one clear strategic direction.''

In a separate statement, Nissan said it will begin studying infrastructure construction, including charging stations, for electric vehicles in Kanagawa with the local government.

The new battery Nissan and NEC are developing will be half the size of a nickel-hydride battery, while having twice the power, according to NEC, Japan's largest personal computer maker.

Lithium-ion batteries are used to power mobile phones and notebook computers. While lithium-ion batteries are lighter and can hold more power than current nickel-metal ones, lithium is a less stable material that can ignite when overheated.

Automotive Energy will increase the number of employees to 190 in 2011 from 80 now. The battery factory will be built in an existing Nissan facility, the company said. The cell will be first used in Nissan forklifts for sale in 2009, Tavares said.

Electric cars powered with the new battery will be able to run at least 100 kilometers (62 miles) on a single battery charge, Automotive Energy President Masahiko Otsuka said.

Hybrids

NEC Tokin, based in northern Japan's Sendai City, is 51 percent owned by NEC, and will invest 11 billion yen over the next three years to produce lithium-manganese electrodes for the new batteries and other products.

Nissan also plans to use lithium-ion batteries to power hybrid vehicles to be released in 2010. The company sold its first U.S. hybrid cars in 2006, six years behind Toyota and Honda, the world's two biggest makers of such vehicles.

Tokyo-based Nissan, 44 percent owned by Renault SA, plans to introduce electric cars in the U.S., Japan and Israel before starting mass production in 2012. Introduction in the U.S. and Japan is scheduled in 2010.