UPDATE 2-Weak battery car sales cloud LG-Renault plant talks

Fri Oct 19, 2012 11:40am EDT

* Next-generation LG batteries to debut with GM

* Sales of Chevy Volt, Nissan Leaf have underwhelmed

* Battery costs to fall 35 pct in 2015

* Renault says plant talks 'ongoing'

By Hyunjoo Jin and Laurence Frost

SEOUL/PARIS Oct 19 (Reuters) - LG Chem Ltd, maker of electric-car batteries for General Motors Co and Renault, said disappointing sales so far may affect plans to build a plant with the French automaker.

The South Korean company's chief executive, Peter Bahn-suk Kim, also said the next generation of power packs would debut in 2015 with GM, which makes the $40,000 Chevrolet Volt electric car, and cut battery costs by about 35 percent.

"Nothing has been decided yet" Kim said of the proposed Renault battery plant.

"The car battery market is still in difficult conditions," he added. "Investor expectations of the electric vehicle market were too high."

Along with alliance partner Nissan Motor Co, Renault has the most riding on electric vehicles after investing some 4 billion euros ($5.2 billion) in the technology.

In July, the French automaker unveiled a strategic partnership with LG Chem and France's CEA energy research institute to develop and produce batteries in the country, dropping alternative power packs made by Nissan's own AESC joint venture with NEC Corp.

A framework agreement was signed by all three parties on Sept. 26, a Renault spokeswoman said on Friday.

"The agreement provides for the construction of a battery plant in France," she said. "Negotiations are ongoing."

Sales of the Chevy Volt and rival Nissan Leaf electric car have fallen well short of expectations, in a worrying sign for the technology's biggest backers.

The next generation of batteries could help bring the price of GM's next flagship plug-in model "down to the $30,000 level" after its 2015 introduction, the LG Chem CEO said.

Detroit-based GM has yet to disclose what will replace the Volt, or give any indication of timing or prices.

A company spokesman confirmed on Friday that GM is working with LG Chem on the next-generation Volt battery, but declined to elaborate.

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