Nissan, the leading manufacturer of electric vehicles, is considering stopping production of batteries at its UK and US sites.
According to Reuters, the Japanese car-maker, which itself has been developing batteries for all of its electric vehicles, is looking to cut costs by sourcing battery technology from LG.
Reuters said two sources familiar with the matter confirmed that decision regarding the Nissan battery plant in Sunderland, UK, and Smyrna, Tennessee, USA, may be just weeks away.
"We set out to be a leader in battery manufacturing but it turned out to be less competitive than we'd wanted," Reuters quoted one of the sources as saying. "We're still between six months and a year behind LG in price-performance terms."
Nissan and its French partner Renault have been forced to look into cost-cutting measures as sales of electric vehicles failed to meet their projections.
According to the rumoured plan, Nissan would move all next-generation battery production to its domestic plant in Zama, Japan, and source the rest from LG, following Renault’s example.
"Renault would clearly prefer to go further down the LG sourcing route, and the Nissan engineers would obviously prefer to stay in-house," another insider said. "The write-off costs are potentially huge."
Nissan’s spokeswoman Rachel Konrad denied the speculations.
“Renault-Nissan remains 100 per cent committed to its industry-leading electric vehicle programme and has no plans to write down battery investments,” Konrad said.
"We have not taken any decision whatsoever to modify battery sourcing allocation," Konrad added, saying that the alliance "does not confirm or deny procurement reviews".
However, the sources said negotiations between Nissan and its manufacturing partner NEC are already underway to shift to dual sourcing.
Nissan and NEC invested 23 billion yen (£132m) in their Zama battery and electrode manufacturing facility in Japan. A further £600m and £210m respectively went to the plants in Tennessee and Sunderland. The US and UK tax payers helped to pay the bill.
One option being explored would see LG, which supplies some Renault models, invest in its own battery production at one of the overseas Nissan plants as the car maker halts operations at the sites.
NEC and LG declined to comment.
Nissan-Renault CEO Carlos Ghosn launched a major push in electric vehicle technology in 2009. The company pledged to invest some £3.2bn to build models including the Nissan Leaf compact and as many as 500,000 batteries per year to power them.