Lithium. Battery maker envisages electric car boom. FXI, GOOG, AAPL, AMZN, RIMM, WLC.v, CLQ.v

By Robin Harding in Tokyo
Published: March 9 2009 22:33 Last updated: March 9 2009 22:33
Electric cars will create such a vast market for batteries that there is little chance of oversupply, according to one of the world’s largest battery makers.
If only 10 per cent of cars went hybrid or electric, there would be an “unbelievably large market” for lithium-ion batteries, Makoto Yoda, president of GS Yuasa, told the Financial Times.
The prospect of a boom in hybrid and electric vehicles has prompted a rush of investment in the advanced batteries, which store huge amounts of energy for their size and weight.
Lithium-ion technology is also seen as the best hope for electric vehicles to travel long distances between charges.
Panasonic’s takeover of Sanyo Electric was largely motivated by the latter’s lithium-ion battery business; Toshiba is spending about Y20bn ($202m) on a new factory as it builds a lithium-ion business from scratch; and the US economic stimulus bill is offering billions of dollars of support for US makers of advanced batteries.
Some analysts say large lithium-ion batteries could become a commodity within five years.
“Of course there is a risk of oversupply and falling prices,” said Mr Yoda. But if low-carbon vehicles became significant, “no one company will be able to make enough batteries”.
For example, GS Yuasa’s joint venture with Mitsubishi Motors is building a factory that can supply 200,000 lithium-ion battery cells a year, but that would be enough to power only about 2,000 electric vehicles.
The Japanese company is also setting up a joint venture with Honda to supply lithium-ion batteries to hybrid electric vehicles, similar to the Toyota Prius, that also use a conventional engine.
GS Yuasa will own 51 per cent of both joint ventures.
Mr Yoda said that if other carmakers wanted GS Yuasa lithium-ion batteries they should expect to buy from those two ventures.
“If we set up another joint venture it would scatter our people and capital. So, if possible, we want to supply from the existing two,” he said.
In the meantime, the slump in global car sales is hurting GS Yuasa’s main business of conventional car batteries, for which it has the largest share of the Asian market.
Sales for the year to March 2009 are expected to be Y300bn, down 4 per cent on last year, but the company still forecasts a net profit of Y4bn.
GS Yuasa has numerous plants in south-east Asia, where the downturn in the car market started early. Mr Yoda said the region was recovering slowly.
“I think today’s terrible conditions won’t continue for so long.”
Even if the car market improved, a wider economic recovery would take longer, Mr Yoda said.
Copyright The Financial Times Limited 2009