Nissan Expected To Exit Lithium-Ion Battery Business – Will Turn to LG Chem

2 years ago by Eric Loveday 82

LEAF Battery Pack Gets Assembled In Tennessee

LEAF Battery Pack Gets Assembled In Tennessee

Future LEAF Packs To Come From LG Chem?

Future LEAF Packs To Come From LG Chem?

Officially, the position right now for Nissan is no comment, but Renault-Nissan inside sources have told Reuters that Nissan will likely exit the business of battery making in the U.S. and UK as soon as next month.

Per Reuters (via Automotive News)

“Nissan boss Carlos Ghosn is preparing to cut battery manufacturing, people familiar with the matter said, in a new reversal on electric cars that has reopened deep divisions with alliance partner Renault.”

“The plan, which faces stiff resistance within the Japanese carmaker, would see U.S. and British production phased out and a reduced output of next-generation batteries concentrated at its domestic plant, two alliance sources told Reuters.”

It’s further believed that Nissan would then follow Renault in securing batteries from South Korea’s LG Chem (widely considered the world leader in lithium-ion automotive batteries).

Reuters quotes an executive on condition of anonymity as stating:

“We set out to be a leader in battery manufacturing but it turned out to be less competitive than we’d wanted.  We’re still between six months and a year behind LG in price-performance terms.”

Largest Lithium-Ion Automotive Battery Plant In The U.S Belongs To Nissan And It's Located In Tennessee

Largest Lithium-Ion Automotive Battery Plant In The U.S Belongs To Nissan And It’s Located In Tennessee

One of the other insiders is quoting as stating:

“Renault would clearly prefer to go further down the LG sourcing route, and the Nissan engineers would obviously prefer to stay in-house.  The write-off costs are potentially huge.”

The final decision on this matter is expected next month and will be made public at that time.

For now, Nissan spokeswoman Rachel Konrad offers these statements:

“[Renault-Nissan] remains 100 percent committed to its industry-leading electric vehicle program.”

“We have not taken any decision whatsoever to modify battery sourcing allocation.”

[“the alliance] does not confirm or deny procurement reviews.”

Reuters adds that the inside sources claim Nissan is negotiating a deal right now with batter partner NEC Corp.  The deal would be some sort of dual source effort in which both NEC and LG Chem would supply Renault-Nissan batteries.  Reportedly, LG Chem could set up shop within either the U.S. or UK Nissan sites to produces batteries at one of the two locations.

Renault-Nissan CEO Carlos Ghosn made this comments last week:

“We’re in the process of opening up battery sourcing to a range of suppliers.”

Ghosn admitted that “within the framework of alliance procurement” Renault-Nissan will likely outsource some battery contracts in the future.  He added:

“What’s important to us is that electric car performance fully meets customer expectations.”

Of note:  both the Renault Twizy and Renault ZOE feature LG Chem battery packs.  Renault’s tie with LG Chem dates back several years and recently Renault signed a joint agreement with LG Chem on next-generation batteries.

Source: Automotive News

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82 responses to "Nissan Expected To Exit Lithium-Ion Battery Business – Will Turn to LG Chem"

  1. Rick Danger says:

    I think that executive meant “We set out to be a leader in battery manufacturing but it turned out to be MORE competitive than we’d wanted.” 🙂

    1. MikeM says:

      Reminds of the time my boat insurance company raised its rates about 15% “to remain competitive”.

      In Ghosn’s case it’s clearly a 180deg. spin on “WE turned out to be less competitive”

    2. BraveLilToaster says:

      I think what he meant to say was “we (meaning Nissan) had turned out to be less competitive than we’d wanted”.

      That one can be more easily put down to a slip of the tongue or a typo.

  2. GeorgeS says:

    This is HUGE.

    Nissan has tons of money tied up in making their own batteries.

    So LG would move into Nissan’s battery production facility in Tennessee?

    Oh well I guess this is good for battery mfg in general as it will consolidate the biz and make it more efficient………and the Holland Plant could be buzzing.

    GM made the right decision.

    1. DaveMart says:

      We are led to believe that centralised production is more efficient.

      If that is the case, then presumably LG should simply expand their Korean factory.

      They could call it something like a ‘gigafactory!’

      Fortunately for American and European workers LG Chem does not think that any such thing is the way to go, and is instead producing batteries close to where they are needed in various locations across the world.

      That is going to be heresy to some, as the ‘word’ on how to produce batteries most economically has been spoken! 😉

      1. drpawansharma says:

        And so is tesla. Nevada is pretty close to fremont.

        1. Anon says:

          He’s just being a tard. Ignore him and his baseless rants. 😛

          1. DaveMart says:

            Is using shortened forms of words for disabilities your customary method of abuse?

            1. Rick Danger says:

              The important thing is that you are getting the abuse. +1 Anon 🙂

              1. DaveMart says:

                You obviously have equal taste.


      2. Anthony says:

        Centralized production can be more efficient. But look at a company like Intel and how they manufacture their CPUs – they have fabrication facilities all over the world – Oregon, AZ, New Mexico, Ireland, Israel, China. They don’t have one enormous plant pumping out CPUs, but what they do is called “copy exactly” where they develop and deploy new manufacturing technologies to a few fabs, and then use a “copy exactly” approach to replicate that around the world. In LG’s case, they would likely need to gut the factory of manufacturing equipment and replace it with their own, but if they were to do a “copy (nearly) exact” approach from their S. Korea facility, it would be easy to replicate economies of scale that way.

        1. DaveMart says:

          That is exactly how LG Chem do it.
          They produce carbon copy factory modules, which they ‘plug in’ across the world:

          ‘The massive white factory, which currently employs 125, is located on 120 acres at the southeast end of Holland.

          Pointing to an aerial photograph of the plant, LG Chem Chief Financial Officer David Lee told reporters there’s enough room to build three more similarly sized factories – just like LG Chem has done in Korea and China in the past 10 years.

          “It all depends on demand,” said Lee. “Nobody knows how long it will take. Based on our experience in Korea and China, it will not take long.” ‘

          That strikes me as a much more flexible way to achieve economies of scale.

          There is a reason why single massive sites like Ford’s at Baton Rouge went out of favour.

          Multiple sites using commonality is how the car industry and its suppliers do business whilst attaining the economies of scale.

          1. Scott Franco says:

            “here is a reason why single massive sites like Ford’s at Baton Rouge went out of favour.”

            I think you meant the Rouge River plant, located in Dearborn, Michigan.

            Kinda funny considering your main M.O. here is calling everyone here clueless morons…

            1. DaveMart says:

              Please point me to the post where I said any such thing.
              It is you who is abusive, not I.

              As for the rest, if you want to make a big deal of a slip like that instead of simply finding it amusing, then that is your problem.

              It is clear that you can’t find rational arguments to counter, and so resort to ad hominem.

              Do grow up.

              1. scott franco says:

                anyone of your posts fit this requirement. put another way, is there any one left here you have not insulted?

                1. DaveMart says:

                  So the answer to that is no.
                  You are simply making allegations without being able to back them up.

                  I don’t call people names.

                  Your analysis of storage requirements, for, I think, California, were a factor of a thousand out, which was not a slip, but made plain that you did not have a handle on the kinds of scale involved.

                  That is your problem, but it did not make me do any name calling, although it did make me think that it might be a good idea if you did a bit more reading up on the subject before pronouncing too definitively on how it should be done, and that storage was ‘no problem’.

                  Perhaps it might be an idea to lose the festering resentments.

                  It ain’t pretty.

                  More to the point, stop making entirely false accusations.

                  It only becomes clear that you can’t back them up.

                  1. shawn marshall says:

                    always admired your patience and you have a mountain of good info and you are a good critical thinker. I value your posts.

        2. Just_Chris says:

          Centralized production is all about critical mass. If you are making 100 engine blocks at 10 sites there are massive savings in bringing those 10 sites under one roof to make 1000 engine blocks in one place. You can make the machines in the plat 10x bigger and run them at 100% utilization. If those engine blocks need 500k+ bolts to hold on the front cover then I would image you could have multiple suppliers of bolts feeding one central facility.

          I am not convinced that if you are making 18500 batteries per pack for an annual production of 100k+ battery packs that you need to build all of the batteries in one place. My feeling is that BEV’s by their very nature favor a more distributed manufacturing base but what do I know, maybe there is a cost benefit to dropping powder in one end and pulling cars out the other.

          If you asked me how I’d do Nissan I think that I would have 2 or 3 battery suppliers who are in competition with each other to provide a battery to a specification and focus on being a car manufacturer. You need so many batteries for each car compared to any other application and the technology/manufacture of the cells is so different to any other component in a car I think it would be better to build relationships with batter manufacturers than try and re-invent the wheel. That of course assumes that there are a number of different companies that can make a batteries of roughly the same performance and specification.

      3. GeorgeS says:

        I said consolidate. Not Centralize.
        The business could be consolidated at LG but still have multiple production facilities.

        (says George as he quickly tries to back peddle and recover) 🙂

        1. DaveMart says:

          I know you did George.

          I was just having a pop at the notion that the Tesla approach is the only one conceivable!

          So my comment was not against yours, but the idea that just because it is all in one place the economies of scale of the GF will be unbeatable.

      4. Taser54 says:

        Shipping Batteries is expensive as they are classified as hazardous. Regional production overcomes the large shipping costs.

        1. DaveMart says:

          Aha! Many thanks!
          I was going to mention shipping costs, then thought better of it as even though they are weighty I could not see that adding much to the cost.
          I forgot about the hazardous goods factor though.
          Great point.

        2. GeorgeS says:

          Yes. the batts need to be refrigerated during transport.

      5. liberty says:

        Gigafactory, if Panasonic and tesla get the chemistry right should be the low cost producer. Transporation costs and iventory holding costs should be low as they are supplying one car plant connected by a rail line. The plant is also convient to raw material (lithium) mining.

        In terms of kwh, if lg supplies the Tennessee nissan plant, scale may dictate 1 plant until volume grows. This may not be for all of nissans lithium batteries, but 2015 gm and nissan should combined only need about 1200 Mwh/year, something the holland plant should easily be able to handle. Later if sales grow they may need a new plant with lower cost transportation to nissan they may need to retool the plant at nissan. For Japan it would be good if they built or modified a separate plant there. Europe volume is low enough that perhaps they need no more lg production.

        1. DaveMart says:

          LG Chem’s business model is to build units near to where the batteries are wanted, simply putting in the same units as they have in other countries.

          That would be exactly how Nissan would like them to do it, as they have to find a use for their battery factories.

          The workers in Tennessee should find their approach a relief too.

          1. liberty says:

            IT will all depend on the volume. Transport costs from michigan to tenessee are not that bad, my guess is less than 600 miles. If they can do all the volume in 2 shifts at holland plant, I doubt lg will build a new US plant.

            1. DaveMart says:

              It also depends on politics, with GM, Nissan and LG chem all involved.

              VW/Audi also seems to be moving towards LG batteries, and may at some stage want to use NA produced ones.

        2. Lensman says:

          Arguing about Tesla Motors’ “GigaFactory” approach to vertical integration and gigantic economy of scale, vs. the improved chemistry of batteries using NMC electrodes, is an apples vs. oranges comparison. The best batteries will be made by using the GigaFactory approach to produce batteries with advanced chemistry, such as LG Chem is apparently in the process of scaling up to mass produce.

          And yes, it’s pretty amusing when someone who thinks the Ford River Rouge Complex is/was located in Baton Rouge, proceeds to lecture others on their lack of knowledge about auto manufacturing and vertical integration.

      6. Jesse Gurr says:

        Doesn’t LG Chem have a factory in Michigan or somewhere they could expand? It is already delivering batteries to Chevy and Ford.

      7. pete g says:

        LG doesn’t make auto batteries in Korea. The only locally produced EV is the chevy spark. Which uses batteries made in Holland Michigan.

        The Kia soul will use a different supplier.

      8. jerryd says:

        In your first part you were doing well Dave until your last line which is inane.

        The word on just lithium production still has at least a factor of 5 increase to go, already been done, just need to increase cycle life to make viable.

        As far as the other commenter below, you seem to gather them as they experience your rather usually wrong posts.

    2. Thomas J. Thias says:

      Not so fast guys, Nissan is denying this Reuters article, matter of fact!

      “[…]Nissan Motor Co. and Renault SA are looking for ways to reduce battery costs and share more components between electric vehicles, but they don’t plan to shutter battery factories in the U.S. and U.K.

      The companies, which share partial ownership and technology, frequently review their battery procurement efforts as part of the effort to reduce costs on the electric Nissan Leaf and the Renault Zoe, a company official said.

      The review, however, doesn’t contemplate reducing employment or production at battery factories in the U.S. or the United Kingdom, the company said, responding to a report by Reuters Monday.

      “The Renault-Nissan Alliance remains 100% committed to its industry-leading EV program. This global commitment continues for the foreseeable future, and we haven’t taken any decision whatsoever to modify battery sourcing allocation.

      Nissan has no plans to impair its battery investments,” said Rachel Konrad, the chief spokeswoman for the Nissan-Renault Alliance.[…]”

      Link Goes To Market Watch Dot Com-


      Thomas J. Thias


      1. pete g says:

        I read Renault wants to spin off battery production. While Nissan wants to keep it in house.

        1. Jay Cole says:

          It the happy-fun sticking point of talking points. When asked for comment the spokespeople will give you what is on the table/the talking points and not speculate on future happenings…Ghosn is said to be working out a deal to split supply Nissan EVs with LG – not dissimilar to the arrangement with Renault.

          If the rumor is true or not, you would never get such disclosure or acknowledgement from their corporate communications – I would imagine they would also be the last to know what is going on; plausible deniability and all that.

          The official retort atm is: “The Renault-Nissan Alliance remains 100% committed to its industry-leading EV program. This global commitment continues for the foreseeable future, and we have not taken any decision whatsoever to modify battery sourcing allocation. Nissan has no plans to impair its battery investments.

          Beyond that, we will not comment on speculation or anonymous sources, and as a matter of policy the Alliance does not confirm or deny procurement reviews”

  3. RedLeafBlueLeaf says:

    We have to hope that whatever improved battery chemistry they have in the 2015 (and perhaps earlier) LEAFs will continue with the new supplier.

  4. DaveMart says:

    Nissan has always struggles with its battery technology.
    Its LMO chemistry just was not good enough at least without active cooling to stand up to Arizonan heat, whilst its high energy density NMC chemistry, under development since at least 2009, and what is needed to build a 150 mile range Leaf is still not production ready.

    However grateful EV enthusiasts may be to Ghosn for his EV leadership, his projections of sales for the 80 mile range Leaf and the Zoe have been way, way out.

    That costs big money, and it is not surprising that he is under pressure to scale back at least the battery side.

    On a positive note this gives LG Chem an opportunity for even greater volume, and the fight between them, Panasonic, and BYD is now getting really interesting.

  5. ggpa says:

    This news casts doubt on the likelyhood that a 150mi Leaf will be available soon

    1. DaveMart says:

      Not really.

      Audi are interested in LG Chem partly because it seems to be close to having high energy density batteries ready for mass production in a non-18650 format.

      If anything, I would guess that it removes a roadblock, as Nissan won’t have to wait until their in-house technology catches up, if it ever does.

    2. Brian says:

      I’m with DaveMart here. My impression is that this makes the 150 mile Leaf even more likely, as they necessarily need a newer battery to achieve it. It they go with LG Chem, who they already admitted is still ahead of them, it could make it easier still to get to 150 miles.

      1. pjwood says:

        Nissan considering the move, certainly underscores the perception that a higher miles EV is the big priority.

      2. Phil Kulak says:

        Sure, but not any time soon. If the ’16 MY was going to be 150 miles, it would have needed to be pretty much finalized at this point. Now we here that Nissan doesn’t even know where batteries are going to come from? That calls even the 2017 MY into question. I used to think that Nissan could beat Tesla to market, but I’m no longer sure. At least Tesla has a road map and knows what it’s doing 6 months from now.

        1. Brian says:

          I’m not sure why you were expecting the MY16 or even MY17 to feature a 150 mile range. The official word from Nissan puts that car at the end of the “power 88 plan”, which ends March 31, 2017. If Nissan were to introduce a new model in March 2017, it would be a MY18.

          This also aligns with their position that the MY13 was a major overhaul from the MY11/MY12. We were told to expect a normal model cycle starting in 2013, which is 5-6 years. Again that puts as in a MY18 for the 150-mile Leaf, introduced in early- to mid-2017.

          1. Alonso Perez says:

            I would be surprised. The current Leaf will be old by any standard in 2017. I am expecting a MY2017 to be introduced around September 2016.

            The Leaf will remain competitive well into 2015, but it will come under pressure in various markets by 2016, not to mention 2017, without a refresh.

            The move to LG tells me that Ghosn is aware of this and wants no delays from in-house efforts that are clearly behind.

            One of the glaring contradictions in this story has been that Nissan supposedly had overcapacity since Leaf volume was lower than projected, yet they did not use that capacity to supply Renault. This does not square. Why outsource when you have idle capacity?

            I’m guessing they did not really have it. Perhaps their rejection rate is high, their marginal cost was too high, or they have other process bottlenecks. Regardless, Nissan is missing one piece of the puzzle. LG has far more experience making batteries, and this is where it is showing.

            I can see why the Nissan engineers would be frustrated. They probably only now have a real handle on the technology and probably feel they can make up the difference in the next few years. But their time may simply have run out. We’ll see.

            1. DaveMart says:

              It sounds like a much more human story to me than one of close calculation that for the group as a whole continuing to use Nissan batteries would be more economic.

              I reckon the Renault folk got tired of the repeated failures of the Nissan engineers to make the higher energy density batteries which the Renault people thought were needed to make the Zoe truly viable.

              They have lost a lot on money on promises which Nissan engineers have not carried through, or that may be the way they look at it.

              Internal conflicts can be remarkably bitter, and both sides can take actions from emotion which hurt them all.

              Most corporate histories, once the facts come to light, usually long after, show similar things.

              1. pjwood says:

                “Internal conflicts can be remarkably bitter”

                Supporters of VW should know.

            2. Brian says:

              I don’t think it will pan out that way. Nissan still has no serious competition. Nobody had leapfrogged them, they are all happy to match the Leaf, and only offer it in a handful of markets. I suspect that Nissan will try to wring out as many years from their development of the current Leaf as possible before jumping to the next generation. Besides, if they jump too early, then their competitors can possibly leapfrog with their own version 2.0.

              Time will tell, naturally, and I would love to be proven wrong. But so far, the enthusiast crowd seems to want to believe that EV technology progresses at some exponential rate, and then get mad at the automakers for not delivering. They are, in the end, subject to rules of economics (and physics!).

              1. DaveMart says:

                I think Nissan has got a hammering from VW.

                It might look as thought the price and the range are similar, so the E-Golf gives no great improvement on the Leaf.

                But they have brought it out without losing the huge amounts which it is clear that Nissan/Renault have done by jumping the gun on electric, and with an inadequate battery chemistry for hot places and consequent large depreciation of their vehicles.

                What is more they also have the E-Up to take on the Zoe in Europe, without the problematic battery leases.

                They don’t have any ultra expensive contracts to continue to take battery components which they don’t need, as Nissan do, and can simply use whatever is best on the market.

                And that is not even the VW group’s main emphasis, as they have developed PHEVs and Nissan are only just waking up to them.

                I don’t much like VW, and their policy of letting others do the pioneering is unglamorous, but they are annoyingly effective.

                Nissan have not got anything now which VW does not have more of, and without burning huge amounts of money to do so.

                The advantage of the E-Golf does not show up on the spec sheet against the Leaf.

                It is profitability.

                1. Brian says:

                  If you are right, and the eGolf is more profitable than the Leaf, then I would expect them to roll it out as fast as the market will bear it. No, I don’t expect loss-leader entry level models. But I do expect 50-state availability, and true dealership support. That would certainly be serious competition to the Leaf.

                  Ultimately, though, when it comes to buying, people look for the best value to them. I don’t care as much about which automaker is more profitable, they still have to earn my business with a better product / value. I have yet to see how the eGolf does so. Maybe when I drive one, I will change my mind.

                  1. DaveMart says:

                    I have had extensive discussions on this site and elsewhere about what the VW group was going to do about electrification.

                    Some argued that it was just a cover story, and that they had no serious intent of ever producing an electric vehicle of any sort, and if they did that it would be a minimal compliance effort.

                    In spite of the VW groups PR department and spokespeople often contradicting themselves and each other and blowing hot and very cold on the subject, it was always perfectly clear to me that the huge investment they were making in readying all five platforms to be multi drive compatible meant that they were deadly serious.

                    If you look at what they have said, that they would be the leader in electrification by 2018, perhaps excluding Tesla in some respects they already are.

                    They have said that they are going to roll out electric vehicles in all states, not as compliance vehicles, and that they are going to train their technicians in all of them.

                    Since they have done everything they have said they would on electrification, there is no real reason to doubt them.

                    More importantly though, they are already well advanced in producing an absolute host of PHEV and BEV vehicles.

                    Those have to be amortised, and you don’t do that by releasing in ZEV states only.

                    Depreciation should also be lower than on the Leaf.

                    I appreciate that customers don’t really care how profitable car companies are, but poor investment hits hard, usually in quality.

                    No money in means poor quality out.

                    Not that I am any too thrilled with VW QC.
                    Thankfully in Europe we have Skoda, part of the group, who still stick to the old VW values of reliability first.

                    Just get the Mitsubihi Outlander PHEV as soon as you can, already!

                    That is a truly awesome car.

                    1. pjwood says:

                      Wrong regarding VW:

                      “If you look at what they have said, that they would be the leader in electrification by 2018, perhaps excluding Tesla in some respects they already are.”

                      That you would say this, puts your head in the clouds. VW Group MIGHT someday make PHEV fun, but they have neither the idea, nor will to deliver a refined electric touring package. Not even close. I paraphrase, “if you are going to have an engine, it may as well drive the wheels”.

                      As long as they spec for the ‘Ring, and develop PHEV for formula racing compliance, VW will never figure out the essence of electric drive. That don’t give a Piezo.

      3. BraveLilToaster says:

        My guess however, is that Nissan already has the battery they need. It’s just that LG Chem has it cheaper.

        Which is quite a good thing from the perspective of the next model’s price point.

        But hey, we’re just speculating here, right?

    3. liberty says:

      lg already said they had a 200 mile range customer. I would say range that long makes liquid cooling, like lg’s pack needs more economical.

  6. leafer says:

    I don’t think anyone should see this as good news at all for the Leaf and Nissan EV’s in general. Best that could happen is LG takes over production at Smyrna , might be a better product. this is not good for Leaf gen 2 at all. I see delays n the future of Leaf gen 2.

    1. DaveMart says:

      Nissan seems to have decided to go with LG because they are ahead, which in my view means that LG are about ready with a higher energy density battery and Nissan know that their own will take a lot longer.

    2. liberty says:

      The gen II was not planned until 2016 anyway. If this is a technically better battery pack and costs areund the same price, there should be time to engineer it for the gen II, and for lg to ramp up their plant.

      I would say if LG is ahead, then its probably better that nissan takes their paper losses on the battery experiment now, before they hurt future plug-in sales.

  7. Anthony says:

    Nissan’s idea of owning and controlling the battery chemistry is a good one, but its about 10 years too early.

    In a mature industry, it would make sense to license/develop their own battery chemistry and control specs and manufacturing. But the battery industry is evolving and will continue to evolve for a while. Nissan wanted a competitive advantage, but really its just a disadvantage. When LG Chem can pump out 200Wh/kg prismatic cells for the Soul EV, what Nissan needs to do is work with them to drive the costs down to put those into the Leaf.

    Having LG Chem come in and setup shop in Nissan’s battery manufacturing plant will hopefully preserve the jobs that Nissan has already created.

    I’m guessing we’ll see LG Chem cells in the revamped 2017 Leaf then. If they use those 200Wh/kg cells, they can easily make a 150 mile range car.

    1. DaveMart says:

      The Kia uses SK Innovation batteries, not LG Chem:

  8. David Murray says:

    Wow. This is shocking news. But I also have to wonder how long this has been known within the companies.. This could have been in the planning stages for a year or more already.

    My guess is that Nissan realizes the 150-mile range EV is coming whether they are a part of it or not. And my guess is their battery tech is just now becoming reliable for the 80 mile EV. So they needed an outside supplier.

    And with Tesla building the giga-factory, that means the only way for other companies to compete is to consolidate battery manufacturing in order to benefit from economies of scale.

    On the bright side, LG chem has proven they have a good battery with the Volt. So I would have no qualms about having an LG battery in my car.

  9. Taser54 says:

    With this move, it’s not looking good for Tesla selling to major EV manufacturers.

    1. Mark H says:

      I don’t think that is Tesla’s market. I believe they are betting on the combination of their Model 3 and the SolarCity lease model.

      I still have drank the Kool-Aide on the Tesla approach. Agreed that it is difficult without the economies of scale, but having spent my whole life working in hundreds of manufacturing facilities, I don’t like the idea of outsourcing the most expensive part of the process. Again, it might be necessary at the moment, but glad Musk is blazing a different trail. If EVs do become the dominant force, then gigafactories will not be an oddity regardless of who owns them.

      1. pjwood says:

        If neither Tesla, nor Panasonic, have the R&D recipe to get close to LG, the same plight as Nissan’s could await. IMO, bundling solar with batteries will come at a rate that may be no faster than EVs retiring from our roads. The parity models for “solar plus storage” (Barclays) only work in very limited markets, and are dependent upon assumptions like no finance costs, etc.

        There’s no free lunch, and we may be seeing one of the reasons Panasonic is apprehensive.

        1. Panasonic employee says:

          I am working for Panasonic in the Dallas area, no one in the company believe the EV battery business will ever take off, the cost for the 85Kwh battery pack is more than $45K without consideration for possible recall should somethings goes wrong. It is rumored that Panasonic has an exit clause in the agreement with Tesla, and for companies who make other critical components (electrolyte, separator), so far, they are not willing to invest a penny in the gigafarce, anyone with a brain would be extremely cautious about the hype from Tesla.
          Another notice: Panasonic offer battery to Tesla at 5% above manufacting cost, that means the money from Tesla will never pay for the factory itself, that is why Panasonic refused to build new factory to satisfy Tesla.

          1. DaveMart says:

            A battery cost of more than $500kwh is pretty hard to believe.

            The cost of the Panasonic 18650’s on the open market is way less than that, before any Tesla discounts.

            You will have to give a lot more details to be credible.

          2. Well, there it is folks!!! This guy says $500 per kWh, and Tesla thinks $250, with $100 possible.

            Time to short Tesla stock !!! Here are some other “insider” comments made over the years:

            “Tesla will NEVER be profitable”…. “Elon Musk is an idiot”…. “Tesla will fail before they ever get the first production roadster on the road” … “Tesla will fail before the Model S ever enters production”… “Nobody wants an electric car, there’s zero demand for them”…. “Electric cars just move the pollution from the tailpipe to the smokestack”… “Even if they make a production electric car, it will never have the performance of an ICE car”… “They are only suitable for neighborhhod vehicles at slow speeds”… “there’s never going to be an infrastructure to support electric cars”… “the Grid will fail if we convert to electric cars”…. “Electric cars will always be too high priced and owning one will be a more expensive proposition than an ICE car”… “The battery pack will never last, they cost too much and they will not work in cold winter weather”… “They will fail at Tesla because they are NOT big Detroit OEM experts”… “They don’t know ANYTHING about sustained production of automobiles” …. “Tesla will NEVER achieve 20,000 cars built in a year… “Hydrogen will be an instantly available fuel infrastructure from clean 100% renewable resources for affordable FCEV’s that cost less than a ICE car”.

          3. Brian says:

            Aw, c’mon guys. He said he is working for Panasonic, he would be the one to know, wouldn’t he? 😉

          4. liberty says:

            If no one in the company thinks lithium batteries will take off, why is Panasonic investing so much money? It seems that someone claiming to be a dallas employee, should have a better idea of what panasonic corporate thinks and what they charge for batteries.

          5. jerryd says:

            Panasonic employee is lying plain and simple.
            Likely a Tesla hater stirring up trouble after losing his money betting Tesla would fall or other biased reason.

    2. DaveMart says:

      Tesla’s only area of battery expertise is the very clever way they stuck together Panasonic’s 18650 cells.

      None of the big car manufacturers, even the ones who had seen it close up in action, such as Toyota and Mercedes fancied doing that.

      The closest they came was in outsourcing some packs, Toyota with the RAV4 EV, and Merc ongoing.

      All the other manufacturers have been waiting for the pouch and prismatic formats to get nearer to that of the 18650 battery pack Tesla uses.

      It looks as though that point is near.

      If there is any chance of avoiding it, what car company is going to want to become dependent on Tesla, or help them reduce their costs when they can go direct to Panasonic for their batteries, if they prefer them to LG Chem?

      The only people less keen than the other car companies on becoming dependent on Tesla is Panasonic, who are clearly seen as a very junior partner by Tesla.

      If their expertise in assembling 18650 batteries is not needed, everyone will deal direct with the battery companies.

      1. jerryd says:

        Dave, you don’t understand the advantages of small cells of higher charge. discharge, cooling.
        Since they are built by high speed robots the fact they are small labor, etc wise doesn’t matter.
        Tesla optimizing the cell production gives it the cost effectiveness of it.
        The fact the new roadster pack will give it 400 mile range proves Tesla is kicking as and taking names.
        Until someone else can come up with a better performing pack for a lower cost, you are just blowing smoke.
        Though I admit your EV posts are better than your RE ones.

    3. liberty says:

      If tesla’s packs come in cheaper and lighter than lg and samsung, I definitely can see Ford, GM, Mercedes, BMW as being interested. I would not expect design wins until at least 2018. The gigafactory is building whole packs and bms, I believe, not just cells.

      On the Otherhand if LG has better battery tech than panasonic, I bet the gigafactory licenses it, even with panasonic as a partner.

      Tesla’s goal is less than $100/kwh in less than a decade. If lg gets them there faster than Panasonic they will switch too.

    4. Lensman says:

      It was never a realistic scenario for the GigaFactory to supply any EV made in large volumes, except Tesla Motors’ own cars. No auto maker would allow itself to be dependent on supply from a competitor for any model it expected to produce in large numbers. Toyota paid Tesla Motors to produce battery packs for the RAV4 EV precisely because they did -not- plan on producing the RAV4 EV in large numbers, and didn’t want to spend the money to develop a battery pack for a low-production car which they were gonna lose money on anyway. The same thing goes with Daimler paying Tesla to make a limited number of battery packs for them.

      You’ll note that Tesla is now talking about using GigaFactory battery packs to supply stationary backup power, including backup for solar power from SolarCity, and possibly “peak shaving” (time-shifting power production) for electric utilities. Tesla isn’t “betting the farm”– or the GigaFactory– on being a major supplier to any other EV maker.

  10. Ford Prefect says:

    This makes sense if Nissan plans to offer different size batteries in its EV’s! Keep it in house for a stock 83 miles, NEC for 90+ miles, LG Chem for the 110+ miles of range.

    1. Lensman says:

      No. The promise of using batteries with NMC chemistry in the electrolyte as well as the electrodes/anodes, is a lower per-kWh cost. Yes, they will have a higher energy density (and thus smaller size), but that’s a side benefit, not the main one. Cost is the #1 reason that plug-in EVs are not selling in greater numbers.

      If LG Chem can supply such batteries, then every EV maker will want to use them in all their cars. That includes Tesla Motors.

      Assuming these new NMC batteries are real– and not just the vaporware they were when Envia promised them– then it will be interesting to see if Telsa Motors licenses the tech from LG Chem, or if they develop their own variety of NMC chemistry for production in the GigaFactory.

  11. Lad says:

    Interesting Posts:

    The problem Nissan has is how to economically, improving the range of their EVs by a date certain…LG Chem has the product; AESC doesn’t. Looks like LG Chem is levering that into using Nissan facilities and porting over their processes….and it seems Nissan is happy to exit the battery business, at least for the moment. Someone got it right when they implied car makers should build their own batteries after the research work is concluded and the product is proven.

    I’m a bit selfish here b/c I want LG Chem to also include an upgrade path for the older Leafs b/c I own one.

    1. Lensman says:

      The problem is that waiting until “after the research is concluded” is that it will be too late to jump into this disruptive tech revolution for any company that waits until battery chemistry is stabilized. It has been changing and improving for the past 30 years or so; there is no reason to think it won’t be changing for another 30 or more. Batteries using graphene-enhanced electrodes are another very significant improvement that many companies are feverishly working to commercialize.

      The best approach for an auto maker that actually wants to produce EVs in large numbers, is to do exactly what Tesla Motors is doing: Building a gigantic factory with a very high volume production, but set it up to be flexible enough to take advantage of improved battery chemistries and components when they come along.

  12. kdawg says:

    “Reportedly, LG Chem could set up shop within either the U.S. or UK Nissan sites to produces batteries at one of the two locations.”

    LG already has a huge plant in Holland, MI to supply batteries to GM & Ford. I don’t think it would be too difficult to increase production for Nissan.

  13. ydnas7 says:

    any article that describes LG’s current xEV batteries as NMC and not as LMO needs to be taken with a large grain of salt.

    If they have the current chemistry wrong, what else do they have wrong?

  14. Nobody has mentioned the $1.6 billion that Nissan borrowed from the US government for the LEAF and battery manufacturing.

    They almost have to have somebody building batteries there.

  15. Lou Grinzo says:

    This is the kind of news that’s really easy to get overly excited about.

    As I keep saying, plug-in cars are still a very new technology, and there will be a lot of bumps and switchbacks and potholes as the market sorts itself out. It’s inevitable, and no one should be surprised that it happens, even if we weren’t expecting this particular development re:Nissan and outsourcing batteries.

    If Nissan really is doing it to get better bang per buck on batteries, then I see no reason for concern. My focus is on seeing the widest possible adoption of xEVs worldwide and especially in the US. (The US is an easy market, thanks to all the people living in single family homes with attached garages. Nothing beats refueling convenience like plugging in at home, assuming your car has the range to let you shun public chargers.)

  16. koz says:

    Resale values are coming home to roast and the bag is getting heavy. This is a better route IMO and one Nissan should have started on in the first place as long as they have heavy input in the pack. They should be specifying if not building the pack.

  17. Angelo says:

    Guys, Elon Musk is smarter than all of you put together. I put my chips in his basket and consequently, sleep very well at night.
    All this banter about increasing battery range, etc. just gives me a headache. Doesn’t it stand to reason that increasing range in all electric cars is a no brainer? Patience, lads, it will happen.