Nissan sees battery costs falling in 3-4 years

* Nissan Americas head sees battery cost dropping in 4 yrs

* Nissan battery plant seen as one of biggest in N.America

* Cost up to $1.7 bln for battery, assembly facilities

* Energy Department loans to cover up to $1.4 bln of cost

SMYRNA, Tenn., May 26 (Reuters) - Nissan Motor Co (7201.T) expects the cost of batteries used in its Leaf and other electric vehicles to come down sharply within four years, the automaker's chief of the Americas said on Wednesday.

Carlos Tavares, Nissan's chief of the Americas, said that government incentives are needed to create initial demand for the electric vehicles.

"We believe we will need two to four years of incentives and supports to reach the level of volume that will free up the cost reductions that we need to implement," Tavares said after a groundbreaking ceremony for a new battery plant near Nashville.

Nissan broke ground on a $1.7 billion a project to expand its assembly plant in Smyrna and build an adjacent lithium-ion battery plant that will be one of the biggest in North America. The facilities are expected to create 1,300 jobs.

Tavares said Nissan had an edge in battery development by being first in the industry to introduce a mass-market electric vehicle later in 2010.

Nissan plans to build the Leaf starting in late 2012 at the Smyrna plant, which has a capacity to produce 150,000 Leaf electric cars per year when it is fully functioning. The new battery plant will have the capacity to produce 200,000 battery packs.

One battery pack powers one electric vehicle.

Nissan has not said yet whether the additional battery capacity would be used for a different electric vehicle within the Nissan or Renault family. Nissan has said it would be open to selling the batteries to other automakers.

The plant project was supported with $1.4 billion of U.S. Energy Department loans. The Leaf is being introduced in Japan, the United States and Europe in late 2010.

Nissan started taking orders on the Leaf in April. It had about 13,000 fully refundable orders in the United States as of Tuesday and 6,000 in Japan. (Reporting by David Bailey, editing by Matthew Lewis)