It’s being called the world’s first factory dedicated to the manufacturing of lithium ion batteries for electric and hybrid vehicles has gone into operation. The Nersac, France plant is a joint venture between Johnson Controls, the world’s largest supplier of automotive batteries, and Saft Advanced Power Solutions, a leading producer of nickel cadmium and lithium ion batteries. The factory will produce up to 5,000 battery packs a year for Daimler AG for use in the Mercedes-Benz S-class series of luxury hybrids, said Johnson Controls spokesman Steve Greene. Mercedes-Benz is introducing its S400, a hybrid version of its S-Class luxury sedan, in the United States. The vehicle, expected to roll out in 2010, will be equipped with a 275 horsepower V6 engine with lithium batteries and is expected to deliver fuel economy of 30 miles per gallon.

Last month, Johnson Controls also announced a production contract with Chinese automaker Chery for hybrid batteries. Another Chinese carmaker, SAIC, has also asked Johnson Controls to supply batteries for hybrids.

“This manufacturing facility demonstrates our ongoing commitment to hybrid technology,” said Mary Ann Wright, vice president and general manager of Johnson Controls’ hybrid battery business.

Most major automakers are developing hybrid and electric vehicles, so the need for lighter, smaller, and more robust lithium ion batteries, is likely to significantly increase in the next few years. For that reason, the joint venture invested 15 million euros, or about $22 million, to allow the plant to increase production capacity as the market grows. Mass production of lithium ion batteries, even at the relatively small numbers, is expected to bring down the costs of lithium batteries. Cost remains a critical obstacle to the widespread use of lithium batteries in cars.