NEC exiting lithium-ion battery race as leaders pull away
Japanese company selling electrode unit, stake in joint venture with Nissan
TOKYO -- NEC is in final talks to sell its battery electrode subsidiary to Chinese investment group GSR, looking to pull out of a capital-intensive business in which it has little reason to stay.
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.
Based in the western Tokyo suburb of Sagamihara, NEC Energy Devices mostly produces electrodes used in lithium-ion batteries for Nissan's Leaf electric cars. Its annual sales are estimated at about 15 billion yen.
The move comes as countries look to accelerate the shift to electric vehicles and other non-polluting cars. Both France and the U.K. have announced that they will ban the sale of new gasoline- and diesel-powered cars by 2040. The global market for rechargeable batteries for environmentally friendly vehicles is forecast to reach nearly $60 billion in 2025, up fivefold from last year, according to Japanese research company Fuji Keizai.
Narrow customer base
Panasonic, the world's top player in automotive lithium-ion batteries, supplies Tesla and Toyota Motor and continues to make massive investments in the field. But NEC relies almost exclusively on Nissan, which is now looking to expand its battery supplier network. Given the amount of investment required to keep its battery business competitive, and the lack of synergies with its other operations, NEC has decided to leave the space.
NEC has also reached a broad agreement to unload its interest in Automotive Energy Supply, a Japanese battery venture with Nissan, to GSR in negotiations led by the Japanese automaker. NEC and NEC Energy Devices currently hold a combined 49% stake in the venture.
Nissan is selling its own stake in Automotive Energy Supply, which produces batteries using electrodes from NEC Energy Devices.
NEC already procures larger batteries for its energy business, such as those used in wind power generation systems, from outside suppliers -- an arrangement that will continue. While Nissan will continue research and development in next-generation batteries, it will turn to outside battery suppliers to try to cut production costs of its electric vehicles.
GSR has invested in American and Chinese car battery makers. With stiffer environmental regulations expected to boost the electric-car market in China, GSR seems to be looking to build a steady supply network for high-quality batteries there.