As many as 1,300 jobs will be created when the plants are operating at full capacity.

Secretary of Energy Steven Chu announced today that the Department of Energy has closed a $1.4 billion loan agreement with Nissan North America, Inc.

The loan will be used to modify Nissan’s Smyrna, Tennessee manufacturing plant so it can produce the Nissan Leaf electric vehicle and the lithium-ion battery packs to power them.

The loan was issued as part of the Advanced Technology Vehicles Manufacturing Loan Program, a $25 billion program authorized by Congress under the Bush Administration as part of the Energy Independence and Security Act of 2007.

The program is designed to accelerate the development of vehicles and technologies that increase U.S. energy independence, create cleaner means of transportation and stimulate the American economy.

Capacity to build 150,000 Leaf EVs per year.

“Nissan applauds the Department of Energy’s support of the development of innovative, advanced vehicle technologies and the creation of clean energy jobs,” said Scott Becker, senior vice president, Administration and Finance, Nissan North America.

The loan will result in the creation of as many as 1,300 jobs when the plants are operating at full capacity.

Modification of the Smyrna manufacturing plant begins later this year, and includes a new battery plant and changes in the existing structure for electric-vehicle assembly.

When completely operational, the vehicle assembly plant will have the capacity to build 150,000 Nissan Leaf electric cars per year, and the new plant will have an annual capacity of 200,000 batteries.

How long it will take to reach those production numbers is a matter of considerable debate, as the EV market is uncertain.

Nissan, along with its Alliance partner, Renault, is committed to mass marketing all-electric vehicles on a global scale, and is pursuing a variety of government incentives on a global basis to ease the transition to EVs, which currently are not cost or range competitive in the minds of many consumers and analysts.

Nissan Leaf, a five-passenger sedan, will be available for private and fleet customers. It is being launched in the U.S., Japan and Europe in December 2010 on a limited basis.

Nissan has formed more than a dozen partnerships to promote EVs in the United States, including State of Tennessee, the State of Oregon, Sonoma County and San Diego in California, Phoenix and Tucson, Ariz., Washington D.C., Seattle, Raleigh, N.C., and with Houston-based Reliant Energy.