September 7, 2010 / 12:35 AM / 10 years ago

UPDATE 2-MMC, Peugeot to make electric cars in Spain -Nikkei

*Plan to start production by 2012 - Nikkei

*To build dedicated production line in Vigo, Spain

*Aim for annual output of 30,000-50,000 vehicles

*MMC says no plans to co-develop elec cars with French group

(Updates with Mitsubishi Motors comment)

TOKYO, Sept 7 (Reuters) - Japan’s Mitsubishi Motors Corp (7211.T) and partner Peugeot SA (PEUP.PA) plan to build a compact electric vehicle at the French company’s plant in Spain, the Nikkei business daily said on Tuesday.

The two automakers will begin production of the vehicle by 2012 and target the European market, without output starting at a few thousand units a year and eventually climbing to 30,000-50,000 vehicles, the paper said without citing sources.

Mitsubishi Motors denied the report, saying in a statement that it had no plans for joint production of electric vehicles with Peugeot.

The two automakers will market the vehicle to postal firms, freight companies and government ministries and it will likely sell for less than 20,000 euros ($25,750) after factoring in government subsidies, the report said.

The car will be made at the French company’s plant in the northwestern town of Vigo on a dedicated production line using Mitsubishi’s technology honed from the development of its i-MiEV passenger electric cars, the Nikkei report also said.

Mitsubishi Motors has a broad-based alliance with French group PSA Peugeot Citroen that includes a deal for the Japanese automaker to supply electric cars under the two French brands.

Last week, Spanish Economy Minister Elena Salgado said Spain was in talks with Mitsubishi Corp (8058.T) about building a factory for electric car batteries in Vigo, PSA’s biggest production site in volume terms. [ID:nLDE6811C6]

The 400 million euro plant could create around 1,500 jobs, Spanish newspapers reported last week.

Mitsubishi Corp and affiliate Mitsubishi Motors operate a joint venture with Japanese battery maker GS Yuasa Corp (6674.T) to develop and make lithium-ion batteries for electric cars. The venture, Lithium Energy Japan, is 51 percent owned by GS Yuasa.

Mitsubishi Motors shares ended the morning session flat at 110 yen while the benchmark Nikkei 225 .N225 shed 0.2 percent.

Reporting by Mariko Katsumura; Editing by Edwina Gibbs

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