Nissan Considers Buying Batteries for Next-Gen Nissan LEAF Electric Car From LG Chem

Ever since the Nissan LEAF electric car launched in December 2010, Japanese automaker Nissan has been working with its battery-making partner NEC Corp — under the joint name of Automotive EnergySupply Corp —  to continually improve the longevity, performance, cost and durability of electric car battery packs.

Nissan could be about to switch from its in-house batteries to LG Chem

Nissan could be about to switch from its in-house batteries to LG Chem

When Nissan shifted LEAF production from a single facility in Oppama, Japan to two additional facilities in Sunderland UK and Smyrna, Tennessee, it invested in excess of $500 million on building two new state-of-the-art lithium-ion battery manufacturing plants alongside each factory to ensure a constant supply of battery packs for its electric hatchback.

Yet, says Nissan CEO Carlos Ghosn, Nissan’s board is seriously considering a move away from its current lithium-ion battery partnership, switching instead to South Korean firm LG Chem.

Ghosn made the comments during an interview last week with The Wall Street Journal in which he reiterated Nissan’s top priority when it comes to electric car battery packs: to make sure that Nissan’s vehicles has the very best battery packs the industry has to offer.

Nissan’s board is seriously considering a move away from its current lithium-ion battery partnership, switching instead to South Korean firm LG Chem.

This time last year, LG Chem’s Cheif Cheif Financial Officer Cho Suk-jeh said that the electronics firm had a brand-new lithium-ion battery pack which was far cheaper and far more energy dense than its previous-generation technology.  Moreover, he promised, one of its electric car customers would be using this new cell chemistry in a 200-mile electric car by 2016.

GM's 2017 Chevrolet Bolt EV uses LG Chem batteries

GM’s 2017 Chevrolet Bolt EV uses LG Chem batteries

We now know that customer and car by name in the form of General Motor’s highly anticipated 200+ mile Chevrolet Bolt EV. Due to enter into production next fall as a 2017 model year car, the Chevrolet Bolt EV is targeting a price point of between $30,000 and $35,000 after incentives.

Its market launch is expected to closely coincide with that of the next-generation Nissan LEAF, which will likely debut as either a 2017 or 2016 model-year car.

That could spell trouble for Nissan and its ageing LEAF. Simply put, in order to compete against the Chevrolet Bolt EV, Nissan needs to produce a car which not only offers a similar range but hits a similar price point.

We have opened to competition our battery business in order to make sure we have the best batteries. For the moment, we consider that the best battery maker is LG. Nissan CEO Carlos Ghosn

Nissan's first goal: to produce or use  a battery pack that can compete against the best in the industry.

Nissan’s first goal: to produce or use a battery pack that can compete against the best in the industry.

Ever the businessman, Ghosn’s response is to explore multiple options to find the best solution for Nissan’s next-gem LEAF needs.

“We have opened to competition our battery business in order to make sure we have the best batteries,” he said. “For the moment, we consider that the best battery maker is LG.”

Nissan’s alliance partner Renault — which owns a 43 percent stake in Nissan — already uses LG Chem batteries for its Renault ZOE electric hatchback and Renault Twizy urban runabout. And while Nissan also owns a 15 percent share in Renault and is the larger automaker by volume, it would be easy to assume a switch to LG Chem is being considered to appease its automotive partner of sixteen years.

Not so, says Ghosn.

“We are not in a power play, we are in a partnership,” he said. “I am discouraging anything that would jeopardise the spirit of partnership.”

Ultimately, he explained, the choice of battery supplier and battery chemistry for the next-generation LEAF would depend on more than just mere politics.

“There is no guarantee for anybody that you’re going to get the business without performance,” he said.

In other words, Nissan will choose the battery pack which best suits its needs…even if that mens turning its back on its current lithium-ion battery alliance.

At this point however, we feel that it’s worth noting that Nissan’s current investment in on-site battery manufacturing plants may not be in vain, even if Nissan switches its battery supplier to LG Chem.

Nissan is rumoured to be bringing out a longer-range LEAF battery pack very soon.

Nissan is rumoured to be bringing out a longer-range LEAF battery pack very soon.

Like its current battery partnership, it’s concievable that Nissan could partner with LG Chem to assume NEC’s position at Nissan’s own on-site battery facilities. Like Tesla’s gigafactory — where Panasonic will be responsible for producing the actual battery cells Tesla will use in its various electric cars and energy storage products — Nissan could easily retain ownership for the facility while passing over everyday management and operation to LG Chem.

Doing so would not only ensure a continuation of employment for existing staff at the facility but also ensure that it has a dedicated, reliable source of cells on-site, built using LG Chem’s own designs and technology.

As we detailed last month, Nissan has already developed its own next-generation battery pack technology for a longer-range Nissan LEAF. It is also rumoured to be working on a 30 kilowatt-hour lithium-ion battery pack for the 2016 model-year Nissan LEAF as a stop-gap measure before the next-generation LEAF to increase range by between 15 and 30 percent over the current 24-kilowatt-hour battery pack found in the 2015 LEAF.

But even thought it has the technology to develop such a pack, the bottom-line calculation will be foremost in Ghosn’s mind. If Nissan can’t produce a battery as cheaply as its competitors, there’s no point in using in-house production.

Whatever Nissan’s board chooses however, there’s one thing we can be sure of. Nissan’s next-generation LEAF will have to match the Chevrolet Bolt EV in terms of performance and price.

And if it can’t do that by beating LG Chem’s current cell design, Nissan will have to do that by using them.

Could it reach out to Tesla? It’s concievable — but we suspect Tesla needs all those cells it plans to make for itself.

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  • Surya

    Actually I thought this had already been decided. But I see why they would make the switch. After all continues investment in R&D just to keep up is maybe not the best business model for them.

  • David Peilow

    Cheif Cheif Financial Officer. Is that like Korean for Chief Financial Officer?

  • jeffsongster

    I agree with Ghosn… Whoever has the safest, most reliable, highest density battery should get the business. I hope they can have LG build them in the local plant like Tesla rather than shipping them around the earth. Using the TN plant would also be good for the American content argument when going against GM.

    • JeremyK

      LG Chem has battery manufacturing in the US. No need to ship around the planet. GM sources their cell from LG’s battery plant in Michigan.

      • jeffsongster

        Great… But I’m guessing the Smyrna Tenn battery shop will still be assembling packs and testing if not actually making the modules under license.

  • Chris O

    Better shape up Nissan because I don’t think GM’s Bolt is the one to beat. That would be Tesla’s upcoming Model 3.

  • Reach out to Tesla? Don’t you mean reach out to Panasonic? And I don’t think so. Ever watch a Tesla burn?

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