Planting the Leaf: Nissan Breaks Ground on a Lithium-Ion Battery Plant for Its Electric Car

NASHVILLE–There wasn't a whole lot of actual news in Smyrna, Tennessee Wednesday–a bulldozer moved some earth around–but it was the first step toward building a $1 billion, 1.2-million-square-foot battery plant to supply the Nissan Leaf.

The five-seat lithium-ion battery car is coming in December, with both cars and batteries at first supplied from Japan. But Nissan is planning to supply both cars and battery packs from Smyrna, with the capacity of 200,000 packs and 150,000 Leafs. That's a significant gamble on the electric car market, and Nissan CEO Carlos Ghosn has confidence to spare.

Nissan's Leaf battery dreams were made reality by a $1.4 billion Department of Energy loan. Daniel Poneman, the agency's deputy secretary, was in attendance at the battery ceremony and he pointed out that the EV business is still in its infancy-there were less than 1,000 electric cars on the road when President Obama took office last year-"but now factories like this will be shipping tens of thousands of them around the world." The DOE, he said, is investing $5 billion to help jumpstart EVs.

The feds are also investing recovery funds in 20 U.S. battery plants, which could create an industry that barely exists now. Asia had 98 percent of the lithium-ion battery business before the Recovery Act was passed, but by 2012 the U.S. could have 20 percent, Poneman said.

Ghosn is the major optimist about the size of the battery car market, telling reporters that the biggest problem could be too much demand chasing too little supply. Other analysts have seen exactly the opposite, and think the market will need more federal help in the form of large-scale government fleet orders.

Ghosn, who drove a Leaf onto the podium for the announcement, makes big pronouncements. "This is a car for the 21^st century," he said. "Driving it is a pleasure, and it is creating a class of its own." Ghosn pointed out that 54,000 Facebook users have said they "like" the Leaf, 115,000 expressed interest on the Web, and almost 13,000 have made $99 reservations-enough to enable Ghosn to say that preliminary orders outstrip the plant's capacity for 2010.

Acccording to Mark Swenson, a Nissan manufacturing executive, the Nissan plant will be environmentally friendly, with the company investigating rooftop solar panels and other green options. The current Smyrna plant (which makes the Altima, the Pathfinder and will be modified to make the Leaf) is getting fuel-cell forklifts.

In California, the Leaf will benefit from not only a $5,000 state cash rebate but also a $7,500 federal tax credit, meaning customers will be able to buy them for $20,000. Given that, and the early adopter/deep green nature of the state, expect the market to emerge there first.