The Renault-Nissan Alliance reportedly is planning to retrench on electric vehicle battery making, consolidating next generation output, currently in the US and UK, in Japan and outsourcing production to LG Chem which could even take over one or both of the plants outside Japan.
According to Reuters, the plans have caused deep rifts among engineers within the Nissan-Renault Alliance.
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Citing a variety of sources, the news agency said Nissan would follow Renault by taking cheaper batteries from LG Chem in Suuth Korea 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,” an anonymous executive told Reuters, adding: “We’re still between six months and a year behind LG in price-performance terms.”
A decision on Nissan battery plants in Sunderland, England, and Smyrna, Tennessee, was due next month (October 2014), the sources told Reuters, following a tense procurement review with 43.4% shareholder Renault.
“Renault would clearly prefer to go further down the LG sourcing route, and the Nissan engineers would obviously prefer to stay in-house,” another insider said. “The write-off costs are potentially huge.”
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By GlobalDataSpokeswoman Rachel Konrad told Reuters Renault-Nissan “remains 100% committed to its industry-leading electric vehicle programme” and had no plans to write down battery investments.
“We have not taken any decision whatsoever to modify battery sourcing allocation,” Konrad said, adding that the alliance “does not confirm or deny procurement reviews”.
Sources told the news agency Nissan was already negotiating with manufacturing partner NEC about the shift to dual sourcing, with Ghosn’s backing.
Issues to be addressed include LC possibly producing batteries in the current overseas Nissan plants as the carmaker pulls out, Nissan’s contractural agreement to take a fixed amount of NEC electrodes regardless of actual need in EV battery packs and repayment of government aid for the US and UK battery plants..
The alliance is also in talks with LG on a deal to supply batteries for future Renault and Nissan electric models in China, sources told Reuters.
NEC and LG declined to comment to the news agency.
The report said LG Chem can produce cheaper batteries and the huge Tesla ‘gigafactory’ in the US is on the horizon, adding competition.
Nissan has production capacity of 220,000 power packs through its NEC joint venture, AESC which far exceeds the 67,000 electric cars Renault-Nissan sold last year, and the 176,000 registered to date. A pledge to reach 1.5m by 2016 has been scrapped, Reuters noted.
