On Monday, the two auto makers plan to announce a venture to test electric cars first in Israel and later in other cities around the world, people familiar with the matter said.
Renault and Nissan are teaming up with former SAP AG executive Shai Agassi to offer electric cars that are powered by lithium-ion batteries and would go about 100 miles on a single charge, these people said. Mr. Agassi's company would set up a network for charging and battery-replacement stations in Israel with subsidies from the Israeli government, they said.
"With rising fuel prices and with battery cost going down, in some parts of the market, we believe electric vehicles have a vibrant future," said a person familiar with Renault's plans.
In an interview yesterday, Carlos Ghosn, who serves as chief executive of both Renault and Nissan, declined to comment on the expected Monday announcement. But he confirmed the two companies are working on batteries and electric cars and have explored the idea of testing electric cars in highly congested cities.
"We have cities that are asking for this," he said, noting that London now imposes tolls on vehicles entering the city's crowded center.
The auto makers are developing a lithium-ion battery to power electric cars that are nearing the testing stage, he said. "We think we are near a mass-market solution."
Renault and Nissan, in which the French auto maker has a 44.3% equity stake, want to mass-market electric cars in congested cities like London, Yokohama, Japan, and Paris by as early as 2010, working with governments if necessary.
The venture with Mr. Agassi is one of the few electric-car projects that addresses a key issue blocking the road: What do drivers do if their battery is running down while they are on the road?
Under the plan, Renault and Nissan would offer a small number of electric-car versions of existing vehicles -- at least one of them is based on the mid-size Renault Megane -- with price tags comparable to those for gasoline-powered models.
That is possible because those cars would be sold to consumers and fleet operators like rental-car companies without battery packs. Mr. Agassi's company, Project Better Place of Palo Alto, Calif., would provide batteries for customers for an undisclosed monthly fee that Mr. Agassi said would be cheaper than the monthly cost of gasoline. Mr. Agassi's company, which has raised $200 million from investors such as the venture-capital firm VantagePoint Venture Partners, is responsible for procuring batteries and operating battery-charging and exchange stations.
The companies hope to gain feedback from electric-vehicle users through Mr. Agassi's green-car project in Israel and then in three to four equally small markets, with Denmark as perhaps the next target, people familiar with matter said.