Japan's third largest automaker, Nissan today said that it would invest about $115 million through Automotive Energy Supply Corporation (AESC), its three way joint venture with NEC Corp, and NEC Tokin, to mass-produce lithium-ion batteries, critical for next-generation "eco-friendly cars."

Nissan expects the new batteries to be more powerful and half the size of nickel-metal hydride batteries used in electric vehicles currently and are widely regarded as a key component to making petrol-electric hybrid cars more cost-competitive and reducing the volume of battery packs in giving pure electric cars more practical.

"Nissan firmly believes the ultimate solution for sustainable mobility lies in zero emission vehicles,'' said Nissan vice president Carlos Tavares. ''Electric vehicles represent one clear strategic direction embedded in Nissan GT 2012, our new mid-term business plan."

Nissan plans to launch its hybrid in 2010 to compete with Toyota's Prius, and also mass market electric vehicles for the US and Japanese markets by 2012.

The first commercial application for AESC's Li-Ion  batteries is scheduled for forklifts for small business operators in 2009, to be followed by Nissan's electric vehicle, due out in the US and Japan, as well as Nissan's original hybrid vehicle in 2010.

AESC will focus on the development and mass production of advanced lithium-ion batteries for a wide range of automotive applications from hybrids, electric vehicles to fuel-cell vehicles. NEC and NEC TOKIN will provide the cell-technology and electrode production.

The companies plan to invest $14.3 million as start up capital with the the equity stake holding between Nissan, NEC Corporation and NEC Tokin Corporation being 51:42:7 respectively.

AESC will invest $114.6 million over a three-year period in a manufacturing facility to be located at Nissan's facility by 2009, where up to 65,000 units will be made annually, starting with 13,000 units a year.

To support AESC's production demand, NEC Tokin will invest $105.1 million over the next three years at its plant  to mass produce lithium-manganese electrodes by 2009.

AESC will market its battery products to potential customers in the automotive industry worldwide. It aims to become a leader in battery technology by producing batteries that offer superior performance, reliability, safety, versatility and cost competitiveness.

The high-performance lithium-ion batteries will employ a compact laminated configuration which delivers twice the electric power compared to conventional nickel-metal hydride batteries with a cylindrical configuration. Based on on-going vehicle field tests, AESC's batteries have been validated to be safe, demonstrating high-performance qualities, on average runs of more than 100,000 km.

Konosuke Kashima, executive vice president, NEC, said ''NEC's expertise in developing safe and low-cost lithium-manganese batteries combined with NEC Tokin's strength in electrode-material technology and production will contribute significantly to AESC's competitiveness. By promoting AESC's batteries for wide-scale vehicle application, NEC is doing our part for the global environment by contributing to help reduce CO2 emissions.''

AESC is also a supplier of Li-Ion batteries for 'project better place', the $200-million-backed venture that aims to reduce global dependency on oil through the creation of a market-based transportation infrastructure that supports electric vehicles, providing consumers with a cleaner, sustainable, personal transportation alternative.

Project Better Place and the Renault-Nissan Alliance are planning for the first wide-scale deployment of zero emission vehicles in Israel and Denmark in 2011.

View: Auto videos | Auto picture galleries