January 09, 2012
Nissan Scaling For Electric Car Production

In an interview with Technology Review Mark Perry, Nissan America director of product planning, discusses how Nissan is scaling up their Smyrna Tennessee factory to make 150,000 cars and 200,000 battery packs.

We have a complete assembly line in Osaka, Japan, built up from scratch, especially for the electric motor. The battery construction is done in a clean room—that's also new for an automotive factory.

We're now re-creating all that here in the United States, in Tennessee. It will be the world's largest battery assembly plant—our engine plant will actually be winding away electric motors this time next year. And at full capacity it'll be capable of putting out 200,000 battery packs a year.

What I'm wondering: What price point do they think they need to reach to get 150k of demand for electric vehicles? My guess is they are counting on CAFE standards to force all manufacturers to charge so much for pure gasoline and even hybrid vehicles that non-EVS rise in price to make EVs competitive. In other words, personal transportation is going to cost more.

Another possibility: Peak Oil will drive up the price of gasoline so high that EVs will seem a bargain due to lower fuel cost. But again personal transportation becomes more expensive.

So what are the odds of a substantial reduction in vehicle battery costs? When? We are in 2012. Where are the signs that EV batteries cost less now than a year ago? Anyone seen indications that EV battery costs are coming down?

Share |      Randall Parker, 2012 January 09 10:15 PM  Energy Electric Cars

xxd said at January 10, 2012 7:06 AM:

Personally speaking I reckon it's the least desirable option you discussed that's actually going to happen.
I think we're going to get higher costs and a (temporarily) reduced standard of living.

We will spend more for power and transportation.

Then the economy will reconfigure around the new higher costs and it will take x number of years to recover the lost standard of living.

Of course, the young people coming in to the labor market right now won't notice, because the lower standard of living will be
all they'll know.

For the rest of us, lower quality restaurants, less road trips, *much less* air travel etc are in our short to medium term future.

If we're *really* unlucky and there is an Iran war things unfold in a disorderly manner before we've had a chance to reconfigure around electric transportation.

But if that happens it's our own fault because North Americans have stubbornly insisted that they each need to drive heavy 15 mpg vehicles for
"their personal safety" and thus have to import nearly half our oil thus forcing us to invade foreign countries so that the oil keeps flowing
for our allies, creditors and export markets. If we weren't taking the oil from Canada, Mexico and Venezuela it could go to Europe or Japan.
Instead if oil supplies are curtailed, Europe and Japan will get their asses handed to them and then we'll *really* see a financial crisis.

Fingers crossed I'm just having a bad day thinking about this stuff

Kentucky said at January 10, 2012 7:50 AM:

All of the "less travel, lower quality restaurants" and so forth are already happening due to money flowing to buy fuel instead of other goods and services. Taxing fuel moves demand away from fuel and toward the rest of the economy because the taxes do not go to the oil producers.

xxd said at January 10, 2012 9:50 AM:

While you are right that "taxing fuel moves demand away from fuel and towards the rest of the economy because the taxes do not go to the oil producers" it's a net wash.

If the price of fuel goes to $8 per gallon then is it better for the rest of the economy if the price of fuel at the pump goes to $8 per gallon PLUS *higher* taxes?

Or do you think that adding higher taxes onto fuel will make the fuel cost portion of the price the consumer pays at the pump lower?

Kentucky said at January 10, 2012 10:27 AM:

The latter. Consumers can save fuel any number of ways, and when the price gets high enough they do.

Kentucky said at January 10, 2012 10:32 AM:

I forgot to add that reduced demand decreases oil prices too. You can see this in the 2008 collapse and the Asian flu.

Joey T said at January 10, 2012 1:00 PM:

As far as a price point goes, I think it has to be within a few thousand of what an equivalent gas powered car will cost. Consumers are willing to pay somewhat of a premium for fuel efficency, like with hybrids or the Ford eco boost engine, but that premium can't be too high if you want to hit a number like 150k.

Peter said at January 10, 2012 1:23 PM:

I run a small manufacturing business. What many people fail to understand about manufacturing, is that often the only way to make something cheaper and better is to "learn by doing". It is of course valuable to do advance research, but the actual process yields information you simply could not see in advance. Even if this plant has problems or ends up producing at a higher cost than expected, the ball will be moved forward a great deal as far as getting affordable electrical storage systems. Very encouraging.

As far as higher gas taxes, that is a distraction from the real issue at hand, the need to cut down the growth of government at all levels. You can bet that extra gas taxes will fund additional corruption and interference in the private economy. Much better for the oil companies to use the money. They are a far more positive force in the economy than our massively bloated government.

Wolf-Dog said at January 10, 2012 7:23 PM:

Higher gas prices will cause a lot of new ambitious and intelligent people to get involved in energy and battery research. This will lead to breakthroughs. Oil companies and OPEC fear precisely this. There was an OPEC meeting a few years ago, when many of the members openly said that they do not want the prices to rise too much so that the world does not get mobilized to invent alternative energy methods.

Nico said at January 10, 2012 10:45 PM:

Sorry for the ignorance guys, but when the electric cars begin to be more competitive and therefore push away from the market the internal combustion engine cars, the price of oil shouldn´t go down because of the lack of demand? Thanks for clearing this for me

Wolf-Dog said at January 11, 2012 2:53 AM:

Yes, the price of oil would go down if electric cars become more available, but ONLY after this starts to make a significant impact (at which time this would mean that the world is already "safe" from total oil dependence.) On the other hand, the oil industry will still be very useful because a high percentage of its activities is to invent and manufacture various chemicals, drugs, composite materials, plastics, etc.

But in the future even airplanes will start using biomass based liquid fuels or even electrical engines.

Once you can build safe nuclear reactors that do not accumulate too much nuclear waste, then the cost of energy production will go down dramatically, and this will also make it possible to manufacture hydrogen and liquid fuels from water, by using the thermal energy of the nuclear reactor.

Kentucky said at January 11, 2012 7:12 AM:

You don't have to wait for electrics, because the USA could create a "lack of demand" by buying cars like Europeans. If every American mid-size and smaller car was as efficient as a Prius and so on up the line it would cut several million barrels a day of gasoline demand. That's enough to make a big dent in world oil prices and restrain the rate of increase afterward.

Oil production from the Bakken just beat half a million barrels a day. http://nextbigfuture.com/2012/01/north-dakota-produces-record-509754.html It would take 8 Bakkens to replace half the gasoline used in the USA. A country full of Priuses could replace it by cutting demand.

I'm sure OPEC loves the people who think that you have to drive a 12 MPG truck or you're not a man.

anonyq said at January 11, 2012 7:47 AM:

Consumers also pay a premium for reliability and easy servicing. Something very true of electric cars.

Engineer-Poet said at January 11, 2012 4:59 PM:

I paid a premium for cutting the money I sent to OPEC, and I'd do it again.  I was ready to spend a fair chunk of change for the next step, but it looks like cars such as the plug-in Fusion will be here before I'll be in the market.

Randall Parker said at January 11, 2012 8:10 PM:


If all else is held equal then cheap EVs should lower the price of gasoline. But if world oil production is declining then EVs will just reduce the extent of the oil price rise. Since I'm expecting declining oil production in this decade I am expecting higher oil prices. What'll limit oil price rises: What people can afford to pay.


You still driving a diesel? You going to get a pure EV or a PHEV as your next car? I think the choice hinges your driving distances. PHEV is higher cost and lower electric range but higher overall range. Probably best for the traveling salesman type.

Joey T,

What people are willing to pay for additional fuel efficiency depends on the price of gasoline. In other words, it depends on how much you'll save per year in fuel costs. Make gasoline $8 per gallon and suddenly the Chevy Volt makes sense even at today's price.

Try this: Go to the fueleconomy.gov web site. Choose some cars to compare side-by-side. Make a Prius, a Chevy Volt, and normal cars among your choices. I already set up a comparison of Chevy Volt, Prius, Ford Fusion 4 cylinder AT, Ford Fusion Hybrid. Then choose Personalize and set to a high gasoline price. At around $9 per gallon the hybrid Fusion saves $2k over the regular Fusion per year with default miles driven and mix of highway/city. In pure electric mode the Volt saves about $2600 per year over the Prius. That adds up pretty quickly.

Of course, at $9 per gallon people won't drive as many miles. They'll drive smaller cars too. But for those who aren't going to alter their driving habits (who can afford a few thousand a year extra for transportation - and millions can) then EVs and PHEVs make a lot of sense once gasoline hits European price levels.

anonyq said at January 11, 2012 9:42 PM:

Driving a diesel makes only sense if you drive long distances. Not something i see happening with EV's

xxd said at January 12, 2012 7:08 AM:


While you're exactly right about the savings on gas, that's not the only factor.

Imagine this scenario:
You're 60 miles from home and you need gas.
Over the last couple days there have been supply hiccups and prices are high so you have waited to get gas but now you really need it. You're running on fumes.
First gas station: no fuel. Second gas station: no fuel. Third gas station: no fuel.
Finally on the fourth try (God Bless GPSs) you find a gas station that sells you a *ration* of two gallons. The sign says "two gallons per customer".
You limp home.

Sounds far fetched? Nope.

In 2008 I was in Scotland and that exact scenario happened to me.

I suspect that we will see a lot of such temporary supply blips as production starts to go into decline and demand jumps around whatever available supply there is.

In such a scenario it's probably worth the premium of an EV to still be able to drive in times of shortage.

Engineer-Poet said at January 12, 2012 6:51 PM:

Of course I'm still driving a diesel.  It's barely over 150,000 miles; do you think I'm going to get rid of it when I just have the engine broken in?

As I said elsewhere, with diesel around 10% more costly than gasoline right now I'm about 20% ahead of the game vs. the same year's gasser.  Even when the gap hit maximum last year I was still just about even (and still running under 10¢/mi for fuel on highway trips).  Diesels reward driving technique, and I take maximum advantage.  This is not to say that I'd buy another one today; GDI like Ecoboost has gotten ahead for the moment.

I'm in a position where a greasel conversion (waste cooking oil) might be economical, but only if I keep driving long legs with regularity.  It would take at least 20,000 miles to pay one off, and my driving cycle changes on short notice.

I thought about adding a Volt to my collection, but what I really want is something with more elan.  Lusting after a Tesla roadster, but the Fusion PHEV may well be more polished.  Have to see about that.

Randall Parker said at January 12, 2012 8:08 PM:


I like to go as long as I can between refills just to save time. But I'm trying to break myself of the habit just because one can never know when a supply disruption could happen. I live in an earthquake zone. After a severe earthquake we could be faced with both a greatly reduced gasoline supply and an extended electric power outage. I'm thinking I want to be able to drive quite a way if, say, I'm not going to have water or electric power for weeks. I could probably bum a ride with people I know in order to get away. But with my own vehicle I could carry more of my stuff.

Your own odds for each type of disruption could be much different. Also your living situation could differ. Someone who has a big yard and detached storage shed could store fuel. This is where diesel has an advantage btw: better than gasoline for long term storage. A diesel vehicle and enough fuel (and supplementary storage containers) to get you many hundreds of miles away means you'll always be able to leave. E-P's got an advantage on that score.

At the same time, solar panels on the roof would mean always being able to recharge an EV, at least for local travel. An EV isn't going to let you escape a region though.

So its a question of your money supply, your housing circumstances, your region's risks, and how lucky you are.

I have not yet bought the sort of car needed for Peak Oil. I intend to. But my commute is very short and I spend so little on gasoline (maybe about 100 gallons a year) that I can wait. I could afford $10 per gallon gasoline now. Heck, I could bike to work. So I'm waiting for more technologically advanced cars that are coming. Look at the forthcoming 2013 Ford Fusion for example: A substantial step up in fuel efficiency for both its conventional and hybrid versions and it will have a PHEV version too. The tougher CAFE standards and perhaps battery tech advances should get us much better Peak Oil cars over the next few years.

Randall Parker said at January 12, 2012 8:15 PM:


You think Peak Oil will cause the price gap between diesel and gasoline to get wider or narrower? Tech like Ford's Ecoboost seems like it'll boost demand for gasoline versus diesel. So maybe the demand for diesel will stay low. On the other hand, demand for liquid fuel for trucking might not drop as much as demand for liquid fuel for personal transportation when oil prices go much higher. Lots of commuter travel could shift to EVs. The demand that will stay with liquid fuels seems like it'll be for longer range industrial transportation. So diesel relatively speaking. What do you think?

Engineer-Poet said at January 13, 2012 8:15 PM:

I have no idea which way the gap will swing.  On the one hand, world demand for the high-quality ULSD produced here will tend to keep demand, and thus prices, higher vs. gasoline; on the other hand, the combination of turbocharged GDI moving gasoline engines into diesel applications and a possible LNG supply network reducing diesel demand from the heavy truck fleet would tend to narrow the gap.

About the only thing that's certain is that electricity is going to be a heck of a lot cheaper than liquid fuels of any kind.  That's why I'm betting on electric propulsion, and want my next car to be at least a PHEV.

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