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Nissan to pull plug on electric car battery production

TOKYO -- Nissan Motor will halt production of batteries for electric and hybrid vehicles, concluding that buying them from outside suppliers will help it hold prices down, people familiar with the matter said Friday.

Nissan has started talks with Japanese and Chinese companies to sell its stake in a battery production venture with NEC, they said.

The decision is expected speed consolidation among battery makers, amid rising demand for power cells used in electric cars and other vehicles with electric motors, analysts said.

The joint venture, Automotive Energy Supply, headquartered in Zama, Kanagawa Prefecture, was set up in 2007 to make lithium-ion batteries for Nissan's Leaf electric cars and hybrid vehicles. It is owned 51% by Nissan, 49% by NEC.

Automotive Energy has the second-largest share of the world market for lithium-ion batteries for cars, after Panasonic. In the year ended in March, it chalked up 36.6 billion yen ($362 million) in sales.

Nissan will sell its entire stake in the venture. It also plans to sell its independent battery manufacturing operations in the U.S. and Britain.

Panasonic and a number of foreign companies have shown interest in the businesses. Nissan hopes to select a buyer by the end of the year, after working out details such as selling prices and employment of current staff.

When Nissan began developing electric cars, it had design and produce its own batteries because there were few independent manufacturers.

The Leaf, released by Nissan in 2010, has sold around 230,000 units worldwide through June. To increase sales, the Japanese carmaker needs to cut the cost of batteries. Because it makes them only for itself, Nissan has few economies of scale and limited scope for cost-cutting. That led the automaker to opt for batteries from outside suppliers.

German automaker BMW, U.S. electric car specialist Tesla Motors and other automakers rely on outside companies for batteries.

Nissan will stop making batteries and focus on the development of new technology such as vehicles that use electric motors and self-driving cars. Pulling out of battery manufacturing will free up resources for the shift. 

Automakers are expanding their range of electric and plug-in hybrid cars to meet tougher air quality-regulations in a number of countries. After Nissan sells its stake in Automotive Energy, the battery maker is expected to improve its productivity and price-competitiveness through deals with other automakers.

(Nikkei)

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