However, the develop and produce lithium-ion batteries is the biggest hurdle to lowering the cost of electric cars, and the high cost of setting up a lithium-ion battery factory makes Nissan heavily dependent on state aid to succeed in its zero-emission objectives. Last month, Nissan, together with Ford Motor Co and Tesla Motors Inc, received approval from U.S. Department of Energy for loans to develop and produce fuel-efficient vehicles in the United States. Nissan will receive $1.6 billion loan to build a battery assembly facility and retool its production plant in Smyrna, Tennessee, to build a new electric cars starting in 2012. Andy Palmer, senior vice president and head of product planning at Nissan told Reuters that the battery production for the U.S. site would cost just over $1 billion!

[Source: Reuters]

Nissan intends to use the loan to retool its manufacturing plant in Smyrna, Tennessee, to produce zero-emissions electric vehicles, which emit no gases, and the lithium-ion battery packs required to power them. Dominique Thormann, senior vice president, Administration and Finance for Nissan North America, Inc (NNA) said: “This loan is an investment in America. It will help us put high-quality, affordable zero-emissions vehicles on our roads. This project will expand our Smyrna plant and that’s great economic news.”

Nissan hopes to become a leader in zero-emissions vehicles and intends offering electric vehicles in the United States and Japan by 2010. The first vehicles for the U.S. market will be built in Japan before production is shifted to the Smyrna plant in late 2012. Construction at the Smyrna plant is scheduled to begin by the end of this year, at which point an environmental assessment should be completed.