Zacks_Analysts' Blog : Nissan Focuses on Electric Cars - Analyst Blog

On July 20, 2009, Japan’s Nissan Motor Company (NSANY) announced that it would develop advanced lithium-ion batteries for electric cars at its new factories in the UK and Portugal with government assistance. The factories will have an annual capacity of 60,000 units each.

The UK facility in Sunderland near Nissan’s car plant will be its primary site for battery production in Europe with the government investing more than $330 million (£200 million) in the plant. The facility is expected to create 350 direct jobs. Nissan with its French alliance partner, Renault will build the plant at Portugal with an investment of about $355 million (€250 million). The site for the plant has not been finalized. The alliance plans to sell electric cars in Portugal starting 2011.

 

Portugal is the second country after Japan where Nissan would invest in a full-scale manufacturing facility for its advanced lithium-ion batteries. The establishment of a plant and a supply base with the cooperation of the Portuguese government would position the country at the core of Nissan's plans to mass-market electric vehicles in Europe and globally by 2012.

In November 2008, Portugal became the first European country to sign a final agreement with the Renault-Nissan Alliance for implementing a zero emission mobility program. The plan calls for 1,300 vehicle-charging locations to be ready by 2011 and various incentives for electric vehicle buyers, including income tax reductions.

The Renault-Nissan Alliance has begun zero emission initiatives at Israel, Denmark, Portugal, The Principality of Monaco, the French utility company EDF, the Swiss electric utility company Energie Ouest Suisse (EOS) as well as the State of Tennessee, the State of Oregon and Sonoma County in northern California, US. In Japan, the Alliance has collaborated with the Prefecture of Kanagawa and the City of Yokohama.

Nissan has undertaken a number of recovery actions to fight the worsening industry conditions. It is now focusing on quality leadership and zero-emission vehicles and abandoned the rest of the plans under its previously announced GT 2012 program.

The company reported significant operating and net losses in fiscal 2008 on the back of weak demand due to the severe downturn in the global economy, the negative impact of a stronger yen, sharp decline in consumer confidence in all major markets and product mix deterioration.

Nissan has projected a loss of $1.79 billion for fiscal 2009 with a 17% year over year decline in revenues. We rate the stock a Hold with a target price of $13.00.