ANN ARBOR, MI, May 26, 2010 -- A day after Nissan CEO Caros Ghosn said that the company’s 2010 production of the Leaf electric car was already spoken for by consumers who have pre-ordered, the company announced a $1.7 billion investment at its Smyrna, Tennessee plant to supply battery packs to power the vehicles.

The Leaf, which will cost buyers $25,000 after government subsidies are factored in, will launch in the fourth quarter of this year.

Ghosn, speaking at the Detroit Economic Club on May 25 said that 19,000 orders had been taken in the U.S. and Japan for the Leaf, which is a 100% electric vehicle with a driving range of about 100 miles in between recharges. The company is setting up production capacity to build 500,000 EVs per year for worldwide sales.

Nissan has taken the boldest course in promoting and planning for EVs despite continued critics and analysis that consumer, especially those in the U.S. are not ready to embrace range-limited EVs. “We are the leader in EVs, and we are convinced that this is the future,” said Ghosn. “But understand that we are not suggesting that EVs will replace internal combustion engines, but rather that this is a technology that will be part of a new technology mix.” Ghosn said he envisioned EVs eventually becoming perhaps 10% of the world mix of new vehicles as emerging markets like China adopt EV friendly policies.

By the time it opens in 2012, the Tennessee battery factory will be able to supply lithium-ion battery packs for 200,000 electric cars annually. The company forecasts it will eventually build as many as 150,000 Leaf hatchbacks at the adjacent assembly plant. The new facility is expected to add at least 1,300 new jobs.

While the company is investing a total of $1.7 billion in the batter facility, $1.4 billion of that is being financed by a U.S. government loan.

“What we’re doing here will radically transform the automotive experience for consumers,” Ghosn said. “Production of Nissan Leaf and lithium-ion batteries in Smyrna brings the United States closer to its goal of energy independence, creates green jobs and helps sustain American manufacturing.”

The Leaf will be the first EV marketed on a mass scale by a major automaker in the U.S. General Motors this Fall will begin selling its extended range EV Chevy Volt. But the Volt, while powered by a battery that will have an electric range of about 40 miles. After 40 miles, a gasoline engine will kick in to power the battery, which will still be pushing the car down the road. The engine does not recharge the battery as it is driving. The Volt has to be recharged from a power source in order to operate under EV status only.

“Gas prices will largely dictate how popular EVs will become and how fast they will be accepted,” says independent marketing consultant Dennis Keene. “But Nissan is to be applauded for jumping out and seizing leadership on the issue…being viewed by the public as an innovator and leader pays big dividends for the entire brand.’

Toyota, Mitsubishi and Ford have also laid out plans to launch EVs in the U.S. in the next three years. But none has set volume goals matching Ghosn’s intention to sell as many as 500,000 electric cars a year by 2012.

“We understand that when you go into innovation or new technology, some people are more bullish and some are more bearish,” Ghosn said this week in Detroit.

President Barack Obama has set a goal of getting 1 million plug-in and battery vehicles on U.S. roads by 2015.