TOKYO -- Chemical maker Asahi Kasei will more than double its planned investment to boost production of separators for lithium-ion batteries, devoting an additional 30 billion yen ($268 million) in response to demand for electric cars and the rise of lower-cost Chinese producers.
The Japanese company is the world's largest producer of separators, an essential part in rechargeable batteries that keeps the negatively and positively charged ends apart but lets ions flow between them. Separator production requires advanced manufacturing technology, and Japanese makers control over half the global market with Toray Industries at No. 2.
The chemical producer's original investment called for 15 billion yen to 20 billion yen, designed to double total annual capacity to 1.1 billion sq. meters at its Shiga Prefecture plant and other facilities by around 2020. The additional 30 billion yen would raise that new capacity by another 30-40%.
Asahi Kasei also is expanding capacity at U.S. subsidiary Polypore, and new factories are being considered for high-demand areas such as Eastern Europe and South Korea where battery makers are opening facilities.
The growing global market for electric vehicles has lifted demand for lithium-ion batteries. Separator demand for these automobiles is expected to exceed that devoted to cellphones and other consumer electronics in 2017 or 2018, and over half of the company's production increase will be dedicated toward automotive uses.
The worldwide market for rechargeable batteries used in electric vehicles should reach 3.93 trillion yen in 2025, roughly five times the size of the forecast for 2017. Toray also plans to invest 120 billion yen to 130 billion yen in order to triple its capacity for separator production by around 2020. Japan-based startup W-Scope, known for its cost competitiveness, has begun upgrading its South Korean factory.
Chinese makers of key lithium-ion battery components are hot on the trail of Japanese rivals. Of the four major components, Chinese companies have made the greatest inroads into electrolyte solutions, since this area has the lowest barriers to entry. Japanese producers in that field have seen their market shares suddenly sink as cheaper producers emerge from China, the world's smartphone factory. But Japanese separator makers remain competitive, and they hope to stay ahead through improvements in technology and scale.