NASHVILLE — Nissan Motor Co.'s decision to exit the electric vehicle battery business has implications for the next-generation Nissan Leaf, as well as for other U.S. automakers.
Nissan announced this month that it will sell its ownership interest in its battery venture, Automotive Energy Supply Corp., to a Chinese private investment group, GSR Capital. The price was undisclosed, but Bloomberg had reported that acquiring the business would cost $1 billion.
The sale comes as Nissan prepares to introduce the redesigned 2018 Leaf EV.
According to unconfirmed reports, the Leaf will debut with an EPA-rated battery range of roughly 150 miles on a full charge. That is a sharp improvement from the outgoing Leaf, which has an EPA-rated range of 107 miles. But it is significantly lower than General Motors' new Chevrolet Bolt, which delivers about 238 miles to a charge, or the luxury-class Tesla Model S, which gets 235 miles.
Nissan has not revealed its marketing plan for the new Leaf. But signals from the automaker suggest that the car eventually will come with more than one battery option, similar to a vehicle that is available with a four-cylinder or a V-6 engine.
Nissan's strategy appears to focus initially on affordability — aiming for about $5,000 less than the Bolt — rather than on industry-beating technology.
But subsequent trim levels of the Leaf will include a battery with a greater range, and a higher sticker price. Nissan will now rely on an outside battery maker to pull that off.
Automotive Energy Supply Corp., established in 2007 when no other batteries were available, is 51 percent owned by Nissan and 49 percent by Japan's NEC Corp. Before completing the sale to GSR, Nissan will acquire 100 percent of the venture.
GSR will receive the venture's two manufacturing plants in Smyrna, Tenn., and Sunderland, England, as well as Nissan's Japanese battery development and engineering operations in Oppama, Atsugi and Zama, Japan — all subject to regulatory approval.
On the surface, GSR's acquisition creates a potentially awkward supply chain reality for Nissan. It will have an outside party producing a core component in a plant on Nissan's property in Smyrna that is integrated into Nissan's adjacent vehicle assembly line.
But by handing over its battery production to an outside supplier, Nissan is freeing up one of the most integrated EV battery production plants on the continent to supply other automakers.
"This will enable GSR to grow its business and look for other opportunities," said Nissan North America spokesman Brian Brockman. "It will give them the scale to further develop their batteries and look for other opportunities."
As the industry moves deeper into electrified vehicle plans, GSR will emerge as a large-capacity battery maker with available North American capacity.
There are still few full-scale EV battery plants in the United States. Tesla has begun producing battery systems at its large-scale gigafactory in Nevada. LG Chem is expanding its EV battery plant in Holland, Mich. LG Chem supplies a wide range of North American customers, including General Motors, Ford and Fiat Chrysler.
Nissan built its Smyrna battery plant in 2010, using $1.4 billion in loans from the U.S. Department of Energy, to produce up to 200,000 complete EV battery packs a year. But Nissan's Leaf sales have never come close to that level of need.
In creating complete battery packs, the Smyrna factory manufactures its own battery cells, a critical piece that is often sourced from Asia.
