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French car maker Renault SA and its Japanese alliance partner Nissan Motor Co plan to build two factories in the U.K. and Portugal to produce lithium-ion batteries for future models of electric vehicles. The announcement is in line with the stated ambition of the alliance to become the leading volume producer of zero-emission vehicles in the next decade. Nissan will start offering electric vehicles in the U.S. and Japan in 2011 and the alliance plans to start mass-marketing electrical vehicles in 2011. Electric vehicle production is in its infancy at present, but the alliance reckons that by 2020 electric vehicles will represent between 10% and 15% of the overall European market, or about one million vehicles. The U.K. plant will be located at Sunderland, north-east England, where Nissan already has a vehicle assembly plant. A decision on the location of the Portuguese facility is pending. It quoted U.K. Prime Minister Gordon Brown as saying that Sunderland, “could now be a strong contender to produce electric vehicles for Nissan in Europe, and we will continue to work with Nissan to ensure this happens.” The Renault-Nissan alliance is negotiating grants and loan guarantees totaling EUR200 million from the U.K. government to help finance the project. Each plant will produce 60,000 batteries annually. Nissan’s Sunderland facility will be its main center for battery production in Europe.

The companies said they are continuing to discuss additional battery production units with other European governments. Renault is in talks with the French government about setting up a battery production plant in France. Renault has already announced plans to start making electric vehicles at its existing car assembly plant at Flins, west of Paris, and company officials say it would be logical to locate a battery manufacturing facility nearby. The alliance is working hard to forge partnerships with governments, city authorities, energy companies and concession operators to promote the use of electric vehicles.