Another Japanese Automaker and Japanese Battery Producer form a JV to Develop Advanced Batteries for Electric Vehicles

Implications: Both Nissan and Mitsubishi Motors have formed joint ventures with battery producers in Japan to produce batteries for electric vehicles.  This follows the example of the well-established Toyota-Panasonic JV that already produces batteries for hybrid electric vehicles like the Toyota Prius.  Do these business collaborations demonstrate a degree of commitment / readiness for Japanese automakers to accelerate the production of advanced batteries for electric vehicles?  Is this, perhaps an admission that they believe that these relationships are required in order to arrive at viable electric vehicles?  In addition, interest / support of these JVs from French automakers could indicate a broader potential for these new ventures.  Other leading automakers – e.g., Honda – and other leading battery producers – e.g., Sanyo, Hitachi – will likely take notice of this trend. 

Analysis: The present nickel metal hybrid batteries in the Prius and other Toyota/Lexus HEV models are made by a joint venture between Panasonic and Toyota, named PEVE.  This JV is believed to be developing lithium ion batteries.  In the past 18 months, two new JVs are entering the automaker-battery producer market in Japan. 

Mitsubishi Motors Corporation [MMC], Mitsubishi Corporation and GS-Yuasa have formed a joint venture, named Lithium Energy Japan [LEJ] and announced plans to manufacture lithium ion batteries for passenger vehicles.  The JV received an indirect inquiry from EV production leader, PSA Peugeot-Citroen which said it was interested in working with MMC to co-develop a new electric drive train for their electric vehicles.  MMC is developing an EV called the MiEV.  

Meanwhile Nissan has formed a JV with NEC-Tokin, named Automotive Energy Supply Corporation [AESC] and announced plans to produce batteries in Japan. [Please see http://www.automotoportal.com/article/nissan-and-nec-joint-venture-aesc-starts-operations for Nissan’s plans and links about AESC ]  Nissan’s alliance partner, Renault has promoted electric vehicles through Project Better Place [ please see http://online.wsj.com/article/SB120111595837510587.html?mod=googlenews_wsj]. 

Both NEC-Tokin of the AESC JV and GS-Yuasa of the LEJ JV have had strong lithium ion development programs that resulted in product lines of large format cells.  The barriers to entry for automotive applications are very challenging – in terms of safety, cost and battery life.   The synergies that should arise with these JV collaborations ought to shorten the time to develop and certify battery systems for new plug-in hybrid electric vehicles [PHEVs] as well as all-electric vehicles [EVs].  Within each JV, both auto and battery technical teams would have the opportunity to concurrently engineer the electric drive train platform – for optimal power and energy storage in light of cost, safety and component life.  Such relationships are a battery engineer’s dream. 

Usually, however, these JV relationships involve a mutual commitment to provide the JV partners with exclusive rights.  This may be the case with AESC, where Renault would seem a natural to participate in the advantages of a JV since it owns a 44% stake in Nissan.  It is interesting that PSA Peugeot-Citroen has expressed an interest in LEJ and the JV embraced them.  Are we perhaps are witnessing the birth of new Tier-One suppliers of battery-electric drive train systems?  In the JV work product, the battery would certainly come with electrical, mechanical and data interfaces to the electric drive train – at minimum! 

Might this business model develop in the US and Europe?  The traditional US and European Tier-One suppliers – e.g., Delphi, Visteon, Continental, Magna, etc. – have programs to develop electric drive systems with batteries.  These are already in place for large vehicles like buses and trucks where OEMs like BAE Systems and Allison Transmissions, along with newer entrants like Enova deliver the complete package.  But this is not presently available for automakers. 

The US automakers are certainly on a different track, preferring to use the US Department of Energy to fund the US Advanced Battery Consortium [USABC, details available at http://www.uscar.org/guest/view_team.php?teams_id=12] and select awardees from promising battery developers.  For example, GM granted one of the four USABC contract awardees – A123 Systems – Tier-One status for their lithium iron phosphate cells in a move that essentially cut out a prospective role for Cobasys as a Tier-One integrator.  The information from A123’s development program and from the three other USABC awardees – Compact Power Inc. [wholly-owned subsidiary of LG Industries], EnerDel [JV of Ener1 (85%) & Delphi] and the Johnson Controls-Saft JV – goes directly to Ford, GM and Chrysler.  No news has surfaced about a USABC effort leading to any JVs between US automakers and battery producers.  Is there an incentive to form such a Tier-One entity, when battery companies feed information directly to all three US automakers?  The answer appears to be “Probably not,” especially since the existing Tier-One integrators are still vying for this business despite not having the USABC information at their disposal. 

In Europe the whole idea of introducing hybrid, plug-in and all-electric vehicle technology has taken a lower profile.  Broad acceptance of Diesel and generally smaller passenger vehicles that provide good gas economy diminish the value proposition for electric platforms for most consumers.  It’s no surprise that the situation in Europe is similar to the US, only with less industry / government support for battery development. 

In summary, the automakers in Japan appear to be serious about supporting specialized companies dedicated to developing and producing battery-electric drive systems for electric vehicle platforms.  By contrast the US and European automakers seem content to take a less involved role to develop and produce integrated electric vehicle platforms systems – a position that  makes their commitment to viable electric vehicles somewhat unclear – but maybe has the advantage of providing more battery choices / flexibility, especially if battery developers succeed on their own. Let’s hope that one of these approaches leads to a well-engineered battery-electric drive train soon!