Nissan, NEC to spend $1 billion on battery output: report

TOKYO (Reuters) - Japan’s Nissan Motor Co and NEC Corp will invest at least $1.1 billion to make lithium-ion batteries for about 200,000 electric and hybrid cars annually in 2011 or later, the Nikkei business daily said on Monday.

Nissan, NEC and NEC Tokin Corp have a joint venture to start manufacturing lithium-ion batteries from next year. It will have an initial capacity to supply 13,000 units a year, which will be first be used in forklifts.

The companies have said they plan to ramp up annual capacity gradually to supply 65,000 units in 2011 for use in Nissan’s in-house hybrid car and electric vehicles due in 2010.

The Nikkei said, without citing sources, that Nissan and NEC had decided to bring the plan forward, building a new factory in Japan in 2011 or later.

A spokesman at NEC said the venture was considering further investment and capacity expansion but no specific figure had been decided. No one at Nissan, Japan’s third-biggest carmaker, could be reached for comment.

Shares in NEC Corp jumped 6.3 percent, NEC Tokin soared 15 percent and Nissan inched up 0.6 percent by the end of morning trade, all outperforming a slight fall in the broader market.

The venture, Automotive Energy Supply Corp (AESC), is also considering setting up factories in the United States and Europe in a bid to tap low-interest loans offered by local governments for the production of environmentally friendly vehicles, the paper said.

The battery joint venture had said in May it would invest 12 billion yen over three years to manufacture lithium-ion batteries, seen as key to making electric cars practical.

Nissan is developing electric vehicles with French partner Renault SA. A top Renault executive told Reuters in October that the Nissan-NEC venture was considering producing the batteries in France to supply its first electric vehicles.

AESC also aims to supply other vehicle makers in what promises to become a competitive field.

Japan’s Toyota Motor Corp and Mitsubishi Motors Corp both have their own joint ventures to develop and produce lithium-ion batteries. Honda Motor Co this month announced a joint venture with GS Yuasa Corp -- also Mitsubishi Motors’ partner -- to produce and sell lithium-ion batteries mainly for hybrid cars.

While demand for cars falters around the world, automakers are looking to speed up the roll-out of next-generation vehicles to sharpen their competitive edge.

AESC is held 51 percent by Nissan, 42 percent by NEC and 7 percent by NEC Tokin.

$1=90.69 Yen Reporting by Chang-Ran Kim and Kentaro Hamada; Editing by Edwina Gibbs