Nissan Ends Its Battery Business, Sells Out Completely To GSR Capital

2 months ago by Mark Kane 20

Nissan’s Smyrna Plant

Nissan officially announced a definitive sale and purchase agreement with GSR Capital (GSR), a private investment fund, for the sale of Nissan’s electric battery operations and production facilities to GSR.

The making of a Nissan LEAF battery in Sunderland, UK

Thus ends a 10 year experiment for Nissan to build its own battery cells and packs.

While negotiations with GSR had been progressing over the past couple of months, we just recently learned that NEC (Nissan’s battery partner) had exited the EV battery business, so we figured this announcement would soon follow.

Nissan will sell almost its entire electric battery operations from around the world, including:

  • Automotive Energy Supply Corporation (AESC) subsidiary, which is first to be acquired by Nissan from NEC (and then repackaged and sold to GSR)
  • battery manufacturing operations in Smyrna, Tennessee, owned by Nissan North America Inc. (NNA)
  • battery manufacturing operations in Sunderland, England, owned by Nissan Motor Manufacturing (U.K.) Ltd. (NMUK)
  • part of Nissan’s Japanese battery development and production engineering operations located in Oppama, Atsugi and Zama

In other words, Nissan is selling the entire shop, but at the same time, all the facilities (including production in Smyrna, Sunderland and Zama) will continue to be fully staffed. That would mean continued production in all locations, but it’s not yet clear who will use those batteries long term.  We assume there is a deal in place to continue supplying Nissan for a set amount of time.

Nissan battery facility in Zama, Japan

Indeed, Nissan encourages that AESC will remain “a very important partner for Nissan”, so it does seem AESC will still be providing at least some quantity of battery packs, if not cells as well, for Nissan EVs going forward.

This decision and sale, also frees Nissan up to more actively pursue and promote other partnerships. We anticipate some joint Nissan-LG Chem press releases are on the near-term horizon (think 60 kWh battery packs for the new LEAF, and future sedan/utility vehicles).

“The sale and purchase agreement covers Nissan’s battery subsidiary, Automotive Energy Supply Corporation (AESC), as well as battery manufacturing operations in Smyrna, Tennessee, owned by Nissan North America Inc. (NNA), and in Sunderland, England, owned by Nissan Motor Manufacturing (U.K.) Ltd. (NMUK). Assets sold to GSR will also include part of Nissan’s Japanese battery development and production engineering operations located in Oppama, Atsugi and Zama.”

“The workforce at all facilities covered by the deal, including the production plants at Zama, Sunderland and Smyrna, will continue to be employed. The headquarters and development centers of the business will remain in Japan.

Nissan will implement the transaction by first taking full control of AESC – founded in 2007 to develop advanced lithium-ion batteries – by acquiring the combined 49% minority holding held by NEC Corporation and its wholly owned battery and electrode subsidiary, NEC Energy Devices, Ltd (NECED).

NEC today announced its approval of the sale of AESC shares to Nissan and the fact that it is in negotiations with GSR for the sale of NECED.

Today’s announced transaction is subject to normal consultation with staff representative bodies and, pending regulatory approvals, is expected to be completed by the end of December 2017. The transaction is contingent on GSR concluding purchase of all NECED shares from NEC. Financial terms have not been disclosed.”

Hiroto Saikawa, president and chief executive officer of Nissan, said:

“This is a win-win for AESC and Nissan. It enables AESC to utilize GSR’s wide networks and proactive investment to expand its customer base and further increase its competitiveness. In turn, this will further enhance Nissan’s EV competitiveness. AESC will remain a very important partner for Nissan as we deepen our focus on designing and producing market-leading electric vehicles.”

Sonny Wu, chairman of GSR Capital, added:

“The acquisition of AESC represents an important step for us in the new energy vehicle industry chain. We plan to further invest in R&D, expand existing production capacity in the U.S., UK and Japan, and also establish new facilities in China and Europe, enabling us to better serve customers around the world. With these capabilities and plans added to the battery business’ already skilled workforce, high technical capabilities and proven product-quality track record, we will be in a very good position for growth.”

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20 responses to "Nissan Ends Its Battery Business, Sells Out Completely To GSR Capital"

  1. sellyt says:

    I wonder if they’ll start selling upgraded batteries for first generation leafs?

  2. David Murray says:

    So, who is providing the 40Kwh packs for the new Leaf? AESC? LG Chem?

    1. Pushmi-Pullyu says:

      Numerous rumors say LG Chem, but so far as I know this has not been officially confirmed.

      Maybe it won’t be officially confirmed. For example, Tesla refused to officially confirm that Panasonic was its battery supplier until they were negotiating for Panasonic to partner with them in building Gigafactory 1.

  3. Pushmi-Pullyu says:

    Nissan takes a giant step backward, retreating further from the lead in the EV revolution.

    😥

    1. Alan says:

      I would normally agree but am willing to keep an open mind at this point, car manufacturers rely on suppliers for various parts of their vehicles and therefore still reliant on others to a degree but this has never caused them any major issues in the past.

      At this stage we don’t know enough about their plans in the medium to long term or what, if any, partnerships they might be developing.

      Granted, on the face of it, it looks like they will be constrained by LG Chem’s ability to ramp up production but it might also give them some flexibility to explore other avenues such as SS battery suppliers which are not too far on the horizon.

      1. Pushmi-Pullyu says:

        Gasmobile makers compete on the performance of their ICEngines.

        EV makers should compete on the performance of their battery packs. If they don’t compete on that, if they all wind up buying indistinguishable commodity batteries from just a few suppliers, then what is left to compete on? Mere styling?

        No. EV makers should control their own battery supply, and should control what kind of batteries are used in their EVs as a core technology, for the same reason gasmobile makers retain the manufacture of their gas motors as a core technology.

        Just my opinion, of course… but hopefully an informed opinion.

        1. Alan says:

          Hypothetically speaking, what would happen if Panasonic walked away from Tesla tomorrow ?

          1. Pushmi-Pullyu says:

            Is this just a hypothetical case, or are you seriously concerned? Panasonic has signed contracts committing to helping Tesla run Gigafactory, and Panasonic is also helping fund the construction. Tesla could get along without the funding — it’s clear they could raise it elsewhere — but Tesla can’t get along without Panasonic’s expertise and management in running the cell-making side of Gigafactory 1.

            So I don’t see that this is a realistic concern. But okay, as a hypothetical case, if that happened:

            Then Panasonic would probably have to pay massive penalties in breaking its deal to help fund and build out Gigafactory 1, and presumably Tesla would look around for another battery maker to partner with, presumably either LG Chem or Samsung.

            It certainly would be a disaster for Tesla and its heavy investments in rapidly ramping up production of the TM3. Whether or not Tesla would be able to survive that, I wouldn’t venture to guess. It certainly would at least delay Tesla’s plans for Model 3 production by a year, possibly more.

          2. Roy_H says:

            Interesting hypothesis. How do you walk away when your equipment is in the same building? When GM walked away from NUMMI their partner Toyota bought their share for a bargain price. I would expect similar for the Gigafactory, Tesla would inherit it all at a bargain price. The expertise is already there.

        2. Roy_H says:

          A lot of people make the false assumption that electric motor technology is perfected and is already a commodity. Far from it! Tesla and GM have radically different designs but both are at the forefront of automotive electric motors. If you think it is so easy, why doesn’t the LEAF have 2.5 second 0-60mph time?

          1. jelloslug says:

            Electric motors are not the pain point in EVs, the batteries are.

          2. john doe says:

            Every car manufacturer could build an EV that goes 0-60 in 2,5 seconds.
            It is a matter of cost and need. Motor, batteries and what not, can be bought from several vendors.
            It is by far not rocket science to build the Electric motor the way they want either.
            It you want to use money on a car with reduced weight, and enough power they can do so. But they need a higher stickerprice to make money. GM had to reduce interior quality, and say no to profit to sell the car fairly cheap.
            A friend of mine works for Wärtsilä designing transverse thrusters ranging from 400kW to about 3500kW.
            A Tesla P85 has a 350 kW motor, just to compare. It they har a different battery design and power electronics it would be even faster.
            It is just a matter of price, and what is going to be profitable.
            I am sure Nissan has decided where they want to be price wice. And have made the rest to fit their price and product category.
            I’m also sure most of their customers are happy with their current leaf, and the new one will be better.
            If the price is right compared to the competition, and the product is OK – they will sell a lot. And I’m pretty sure customers don’t have to wait in line for years.
            But at the same time it is curcial that Tesla sells a lot of the Model 3, as they have to show other car models. Truck, pick up and a van/minibus. They must ise their reputation to keep making changes. I’m confident Tesla could sell 1 million M3s by 2022. It they can handle volume and quality.

        3. Trolura says:

          One major difference between internal combustion engine and batteries for EV’s is that the technology for better batteries is driven by phone/tablet and a lot of different possible emerging technologies could potentially render the existing lithium based batteries obsolete. So I think it is a very good move by Nissan. Where they can offer added value has moved towards software and with self-driving vehicles on the way I believe software will be where the companies will compete.

        4. Alonso Perez says:

          I don’t know. I can see it both ways. I think in the long run batteries will in fact be a commodity. Chemistry is chemistry and patents will be licensed, so everybody is going to be making roughly the same product (though it might stratify into high performance and standard performance, sort of like computer RAM or LCD screens. But at any rate, like all other components in the electronic industry’s supply chain, batteries will become a commodity.
          The question is when and how that transition will happen, and for how long manufacturing own batteries will be a good allocation of capital for manufacturers. I don’t really know. This requires an understanding of the global supply chains and options for capital allocation options towards EVs. Ghosn isn’t stupid and I’m sure he has thought it through. Tesla has a different set of priorities so they can easily both be right given their respective constraints and opportunities.

  4. speculawyer says:

    That cell/module design seems like a crappy one. Not good for thermal management which turns out to be more important than Nissan realized.

    You want to be able to cool batteries during DC fast-charging, during high-stress usage, and to maximize lifetime. And you want to be able to warm them to operate well in cold weather conditions. And you should be able to warm them from AC line power while plugged in so your car battery is warmed up from the grid when it is plugged-in in cold climates.

  5. Four Electrics says:

    Nissan was always precocious when it comes to EVs–beating the Model S to market. Now they are the first to abandon their own battery ambitions in favor of more efficient suppliers.

    Don’t make your own steel, don’t make your own tires and don’t make your own batteries.

  6. Jake Brake says:

    LG Chem makes some awesome cells at competitive pricea, hard to beat that combo.

  7. Jason says:

    Well, it will be interesting to see if LG Chem can ramp up production for all these EV manufacturers. There would be absolutely no reason Nissan couldn’t use LG Chem as well as any other supplier they wanted to. Personally, I think Nissan has made the wrong decision, they should have followed Tesla lead and partnered with another battery company than sell it off completely.

    A comment here asks what happens if Panasonic breaks from Tesla. If anything I could imagine Tesla breaking from Panasonic rather than the other way. It would be hard to imagine Panasonic walking away from 500,000 battery packs unless they grossly under priced the packs.

    Nissan walking away from their battery business might be more related to trying to re-establish their image in the wake of all the bad publicity their degradation has endured. But then they could have just added Thermal Management System (TMS) to their pack and removed all the negativity, plus their current packs don’t seem to have the same amount of degradation issues than the poor 2011/12 models. If they could crack the degradation issue then they have a huge cost advantage of not requiring the TMS complexity.

    LG Chem will no doubt require TMS. Nissan now have no choice but to adopt wherever the battery company demands.

  8. Tom says:

    I may be proven wrong but I’ll keep saying it until that point. Exactly ZERO evidence of Nissan ceasing usage of the current battery supplier has been presented. Quite the contrary.
    1. If the battery company is owned by Chinese this allows many things to happen such as increased investment but also favorable treatment in the Chinese market. Look at the top 10 Chinese electric vehicles…there’s a heavy govt incentive bias there.
    2. In order to get more than a 12 cents for the sale of the subsidiary, Nissan would have almost certainly had to sign a binding long term contract to continue to use the supplier at guaranteed minimums. Otherwise the company would have been effectively worthless.

    There is no other logical conclusion other than Nissan signed a long term contract or at least agreed to continue existing contract for using the existing battery supplier. I’m not suggesting Nissan won’t add another vendor in the mix, but it will certainly not stop using the current vendor any time soon.

    1. BenG says:

      Yep, agree AESC will likely be making battery packs for the new LEAF for at least a couple years.

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