NEC Exits Battery Electrode Business And Joint Venture With Nissan

4 days ago by Mark Kane 33

Nissan LEAF battery pack

Nikkei has exclusively revealed that NEC intends to sell its lithium-ion battery electrode subsidiary NEC Energy Devices to Chinese investment group GSR for about 15 billion yen ($135 million). They are apparently in final talks now.

Former Nissan CEO Carlos Ghosn (now the combined Renault-Nissan-Mitsubishi Alliance CEO/chairman) at a Nissan/AESC battery production facility

The NEC Energy Devices was supplying electrode materials to the Automotive Energy Supply Corp. (AESC) – a joint venture between Nissan (51%) and the NEC group (49%). In turn, AESC was producing batteries for the LEAF.

NEC also would like to leave the deck of AESC by selling its stake… just like Nissan.

“The Tokyo-based manufacturer has apparently offered to sell NEC Energy Devices for about 15 billion yen ($135 million) to the Chinese investor, which is also negotiating to buy NEC’s interest in a battery joint venture with Nissan Motor.”

It now seems that Nissan making its own batteries (through AESC) is nearing an end, as both partners are trying to offload their respective battery manufacturing assets.

source: Nikkei

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33 responses to "NEC Exits Battery Electrode Business And Joint Venture With Nissan"

  1. Terawatt says:

    I don’t know if it does, but I hope this means Leaf 2.0 comes with LG cells!

  2. georgeS says:

    Do we have final confirmation that LG Chem is the supplier now?

  3. Pantarei says:

    Looks like a dumb move from the outside, but they a lot closer to the fire. If Toyota, VW and others genuinely are able bring solid state technology on the market in just a couple of years, it could make more sense.

    1. Tom says:

      This is about the third article here that throws out there the idea the Nissan is switching suppliers when in fact a far more plausible reason is that by having the battery be Chinese owned, it gets you deeper into the Chinese market because in order to get the big share of subsidies, stuff has to be made in China. My ‘opinion’ is that the move by Nissan to divest itself of the battery manufacturer is at least in part due to obtaining better market penetration in the Chinese electric vehicle market. I’ve seen no statements by Nissan saying anything about switching to LG, but rather speculation.

      1. Pantarei says:

        It still doesn’t explain NEC getting out of a business with a rapidly growing market. Even if their technology isn’t the best, it’s still better than a lot of their Chinese counterparts, that’s probably why they’re being bought. I think Chinese battery manufacturer Amperex Technology Limited parent company is Japanese TDK. Something similar could’ve been constructed.

        1. Jason says:

          It does seem strange to exit this business just when EV’s are set to really take off. Maybe they have some knowledge we don’t, maybe it is a play to enter the Chinese market, or maybe it is to distance their brand from the poor degradation of the batteries. Time will tell.
          Seems like a cheap sale as well.

    2. Pushmi-Pullyu says:

      If solid state batteries were going to be produced in industrial quantities in only a couple of years, then someone would already be taking advance orders for them. This was discussed on the recent Tesla earnings call. There isn’t anything better than slight improvements in the chemistry or form factor for EV batteries in the near term; not for the next couple of years at least, and from what the Tesla reps said, my guess is probably not for at least four years.

      Will outsourcing battery supply prove to be a smart move by Nissan? Frankly, I can’t see how that can possibly work for them in the long run. VW and GM and other auto makers are finally, albeit reluctantly, starting to talk about plans for building out a battery supply that they control, so they can control production of their EVs.

      By selling off its own battery factories, Nissan is moving backwards and showing short-term thinking. Not a good place to be in during a disruptive tech revolution!

      1. trackdaze says:

        It has recently.acquired a controlling stake in mitsubishi who has their own battery supply.

        Mitsubishi also has a jv for advanced batteries with bosch and yuasa that acquired a solid state start up 2015. By 2020 is the goal.

        1. Pushmi-Pullyu says:

          Well of course I always hope that an announcement about some breakthru battery tech, or the formation of a new high-tech battery startup or research team, will lead to some real advancement. But startups generally promise (or at least promote the idea of) commercialization in five years, because most investors won’t wait longer than that to earn a profit… and not because startups can often commercialize a breakthru tech in five years or less.

          I’ve been following battery tech since I joined the now defunct TheEEstory forum, back circa 2008. In all that time, we have seen one and only one significant advancement in commercial batteries usable in EVs, and that’s LG Chem’s new lower-cost (and possibly higher depth-of-discharge) battery cells.

          Given that we see wide-eyed, breathless announcements of a breakthru battery tech about every two weeks, that’s a batting average of about 0.0023. So, I wouldn’t hold my breath that the “solid state start up” you mentioned is gonna pay off, and whatever Bosch is working on probably has a very low probability of success too.

        2. Moché says:

          Den why not combine their assets with doze of Mitsubishi ?

  4. speculawyer says:

    It is interesting to watch the different battery strategies. Tesla has gone all in on building their own batteries while Nissan has decided to quit making batteries.

    Building batteries is a low margin biz but it is obviously the most critical component of EV. Wanting to get rid of a low margin biz seems to be logical but it seems even more important to keep control of the most important component part of an EV!

    I tend to think that Tesla is making the smarter move although it is risky. But they seem to be watching the battery market like a hawk. Regarding new battery technologies, on the conference call Elon basically said “Put up or STFU.” And there has been a lot of FUD spewed lately *cough* Toyota & solid-state *cough*

    1. speculawyer says:

      Sergio talked about how the autobiz hollowed itself out by becoming so dependent on suppliers. Auto-makers out-sourced so much of car building that that the only real core skills they have left is the building of internal combustion engines and transmissions.
      But guess what…both of those technologies disappear when you build EVs! So traditional automakers really aren’t in better shape than Tesla to create EVs! Other than knowing how to put assembly lines into operation, what advantage do they have over Tesla? Seems like almost none!

    2. Pushmi-Pullyu says:

      “…on the conference call Elon basically said “Put up or STFU.” And there has been a lot of FUD spewed lately *cough* Toyota & solid-state *cough*”

      I can see how talk of revolutionary solid-state batteries might be seen as “FUD” if you’re talking about the money Tesla has invested in Gigafactory 1. But I don’t see it that way. There are a lot of people working on solid state batteries, and it seems almost inevitable to me that someone will be able to commercialize that tech eventually.

      Where it becomes FUD is where someone says “Well, Tesla wasted all that money on building Gigafactory 1 because solid state batteries are coming!”

      Well no, not at all. Tesla is striking while the iron is hot; the early bird is getting the worm… pick your own cliche. Tesla is doing pretty much exactly what the Ford Motor Co. did when the latter was ramping up production of the Model T, by building the River Rouge industrial complex, what today we’d call an extreme case of vertical integration.

      I’ve seen Ford criticized by Johnny-come-latelies saying “Ford wasted that money on the River Rouge complex because ordering parts from suppliers wound up being less expensive.” Yes, after Ford had created the market for large-scale automotive suppliers, businesses arose to fill that demand. But those businesses did not exist when Ford was trying to swiftly ramp up production of the Model T.

      Likewise, Tesla has been repeatedly production constrained because Panasonic has not been willing to ramp up battery cell production as fast as Tesla wanted them to, to supply the Models S and X. For Tesla to put the Model 3 into production and ramp that up far, far faster, absolutely requires Tesla to build out and control its own battery cell supply.

      I don’t understand why people keep arguing against this. It’s like arguing that if you try hard enough, you can get 1 + 1 to equal 10 instead of just 2. No, if you need 10, then you need bigger numbers to add up to that.

      And Tesla needs a bigger supply of batteries. It’s not going to come from rainbows and unicorns; Tesla has to build its own battery production.

      1. speculawyer says:

        “Where it becomes FUD is where someone says “Well, Tesla wasted all that money on building Gigafactory 1 because solid state batteries are coming!””

        Well, this is exactly what a lot of the talk looks like to me. There’s these articles talking about how Toyota is going to be cranking out these great solid-state battery EVs in the early 2020s and thus Tesla is wasting its money on the Gigafactory and blah blah blah.

        That’s hardcore FUD. No one knows is those solid-state batteries will work, will be easy to manufacture, will be cheap to manufacture, etc. It’s all quite speculative but thrown out to spew FUD on Tesla.

        1. Pushmi-Pullyu says:

          I agree entirely with your comments except for this:

          “No one knows is those solid-state batteries will work…”

          Anybody who has watched the “Search for the Super Battery” episode of PBS’s “Nova” knows that yes, they do work. At least, the ones from Ionic Materials do. You have solid points, Speculawyer, about us not knowing if production can be successfully commercialized, or how long they will last in use. But clearly those batteries do work, and clearly are much safer (no thermal runaway) than li-ion batteries in use today!

          1. speculawyer says:

            Yeah, they do work…but I guess I mean in an automotive environment. There could still be thermal issues, safety issues, reliability, etc….something unforeseen that makes them impractical. But you’re right that bigger issue will probably be manufacturability, cost, etc. And those may all get solved too…but we just don’t know yet.

            I really hate the “let’s just keep working in the lab to see if we can improve things” attitude because most improvements are made through the experience of actually building and deploying things. Improvements on the manufacturing floor, improvements of problems only discovered due to products in the field, improvements in raw materials supply chains, improvements in financing models, improvements suggested by customers, etc. Labs are great for building multi-billion dollar science projects but terrible at designing economically-optimized real-world products.

      2. Asak says:

        I think your explanation here about Ford is actually why Nissan is divesting its battery operations. When they wanted to make the Leaf there were no battery makers capable of supplying them. They had to “create the supply”. Now with EVs and battery tech catching on, they no longer need to keep this going.

        Also there are some significant advantages to outsourcing. A company selling batteries not just to Nissan but to other companies as well has greater economies of scale. They also have more resources to devote to further R&D since they’re making money by selling to the entire market and not just a single company.

        If Nissan doesn’t feel like they *already* have a competitive advantage in battery technology, it makes more sense for them to cut their losses and buy from whoever can supply them with the best product. If it turned out they were far out ahead in terms of technology then it might make sense for them to become a supplier to other manufacturers, but that doesn’t seem to be the case (actually in that case a full spinoff might still make more sense, so the company could be operated entirely independently without undue influence from Nissan).

        Frankly I am not convinced that it makes sense for most car manufacturers to get into the battery production business. It may make sense for Tesla because they still need more batteries than the market is supplying. They also can use batteries not only for all their cars, but also their solar business and energy storage business. In the end they’ll probably build out production facilities and basically become a battery supplier to many other companies.

        If Tesla is really going to become a dominant company due to EVs it’s actually probably more likely through that method, rather than single handedly taking over the majority of the automobile market.

        1. Pushmi-Pullyu says:

          @Asak:

          Hey, thanks for taking the time to write your thoughtful and well-informed post. You make some very good, solid arguments, even if I disagree with some of your conclusions.

          Asak said:

          “I think your explanation here about Ford is actually why Nissan is divesting its battery operations. When they wanted to make the Leaf there were no battery makers capable of supplying them. They had to ‘create the supply’. Now with EVs and battery tech catching on, they no longer need to keep this going.”

          All that is true, but only if Nissan has no plans to significantly ramp up production of plug-in EVs. What are they gonna do in 2020, when a lot of auto makers say they plan to start producing EVs in significant numbers? Tesla is planning ahead to build out battery supply to stay ahead of demand. Nissan very clearly is not!

          “Also there are some significant advantages to outsourcing. A company selling batteries not just to Nissan but to other companies as well has greater economies of scale. They also have more resources to devote to further R&D since they’re making money by selling to the entire market and not just a single company.”

          While all that is true, it in no way alters the reality that Tesla has had to build its own large-scale battery supply because Panasonic repeatedly refused to ramp up its production as fast as Tesla needed them to. The fact is that battery makers are not willing to build out new supply until they feel practically guaranteed that there will be long-term additional demand for that supply. Battery makers got burned back circa 2011-12 by building out an oversupply, but not having demand rise to match that. They wound up with a glut on the market, which is why Envia went bankrupt and A123 nearly did. I can sympathize with the battery makers’ caution; as they say: Once burnt, twice shy. But that doesn’t any any way alter the fact, the reality, that this puts severe restrictions on how fast EV makers can ramp up production.

          “Frankly I am not convinced that it makes sense for most car manufacturers to get into the battery production business. It may make sense for Tesla because they still need more batteries than the market is supplying. They also can use batteries not only for all their cars, but also their solar business and energy storage business. In the end they’ll probably build out production facilities and basically become a battery supplier to many other companies.”

          But you could make the same argument about ICEngines. Auto makers retain the manufacture of their engines because it’s their core technology, and it’s what they compete on. If all auto makers are using commodity batteries for their EVs, then what are they competing on? Electric motors in EVs are pretty much all the same these days. There’s little or nothing there to compete on. I suppose they can compete on the efficiency of their PEM (Power Electronics Module) including the inverter, and other bits here and there — Tesla says it improved the Model S just by upgrading the main fuse.

          But it seems to me that batteries are going to be the “core technology” for EVs; the technology on which various auto makers are going to compete. If all EV makers wind up using just a handful of battery manufacturers to buy their batteries from, won’t cars become merely different cookie cutter shapes of the same dough?

          “If Tesla is really going to become a dominant company due to EVs it’s actually probably more likely through that method, rather than single-handedly taking over the majority of the automobile market.”

          Well, you certainly are not the only person to suggest that Tesla will expand its other products to the point that making EVs will be just a sideline to them. I don’t see that, because Tesla isn’t attempt to take over the actual battery cell manufacture; they’re leaving that in the hands of the experts at Panasonic.

          But regarding the future direction of Tesla Inc., and Tesla Energy, we shall see!

          1. Another Euro point of view says:

            Very informative comments.Thank you to all of you !

    3. Mikael says:

      Nissan will most likely continue to build their own batteries. Just not the cells anymore which they will buy from another company, just like Tesla does.

      1. speculawyer says:

        “Nissan will most likely continue to build their own batteries. Just not the cells anymore which they will buy from another company, just like Tesla does.”

        When you have a supplier (Panasonic) building the cells within your own factory that you are designing, that’s not really outsourcing. It is more of joint venture. Or something. But Tesla is clearly deeply involved right down to the cell design and battery chemistry used.

        1. Pushmi-Pullyu says:

          Tesla has teamed with Panasonic to build the production lines inside Gigafactory 1, just as Nissan teamed with NEC to build the AESC factories. But in both cases, the fact that the auto maker partially or mostly funded building the factories allowed them, and not the battery tech company, to control production.

          1. Pushmi-Pullyu says:

            I should have added: In both cases, NEC-Nissan and Pansonic-Tesla, it’s a full partnership.

  5. Chris O says:

    Looks like AESC screwed the pooch, failing to deliver on next gen batteries causing Nissan -once an EV leader- to fall behind.

    Nissan took its business elsewhere so it makes sense that AESC was disbanded.

    1. speculawyer says:

      The air-cooled prismatic-cell packs made by Nissan don’t seem to have been a great design. Especially that first generation that had those terrible problems in hot weather.

      1. Pushmi-Pullyu says:

        Yes, but the solution there would be for Nissan to start using a liquid-cooled battery pack, just like other EV makers. It’s not a problem with the cells, but rather with the pack design. Moving from using AESC cells to LG Chem cells isn’t going to solve that problem, it’s just going to get them cheaper cells.

        Nissan has given absolutely no indication that it has put an active thermal management system into the Leaf 2.0. Here’s hoping they surprise us, but it’s getting pretty late for them to still be keeping that a secret, and my hope regarding that is fading fast.

        1. Jake Brake says:

          Actually it does help the issue, LG also has cells that are more high temperature tolerant than AESC.

          1. Pushmi-Pullyu says:

            Okay, but are those cells with higher temperature tolerance competitive on cost and energy density?

            Optimizing cells for one characteristic generally comes only at the expense of poorer performance in other characteristics.

          2. speculawyer says:

            Even batteries that are more tolerant of temperature variations would still perform much better with a thermal management system. Except for stripped down low-cost EVs, I think a thermal management system is necessary to maximize range (warm batteries with AC power in morning before leaving home), speed up charging (keep them cool during DC fast-charges), and lengthen their lifespan.

    2. SJC says:

      Nissan needed NEC early on, they had both worked on this for a decade, time and tide move on.

  6. kubel says:

    Good riddance.

  7. Martin T. says:

    I suspect Nissan would like to have its money back & be able to source the next generation of solid sate batteries etc. Where ever it likes for competitive advantages. Remember everyone that the scientists are predicting a substantial increase in energy density for batteries. For companies like Tesla when the time comes to update to the next generational battery it will be a major disruptive event. Plus it depends if the patent holders will let you license it, so it could end up being a high risk game owning your own battery plant.

  8. SJC says:

    NEC did a good job, it was Nissan that did not liquid cool the packs.

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