Published on September 13th, 2012 | by Zachary Shahan10
Fears Grow as Battery Manufacturers Face Potential “Ghosn Shock”
If there is one man who knows how to rev up a market, it is Carlos Ghosn, chief of Nissan. Ghosn is renowned for his disruption of Japan’s steel industry — in 1999, he pushed suppliers to bring down prices to assist his corporate recovery plan.
Ghosn’s impact on Japan’s steel industry is thought to have been so scathing that it gave rise to the industry’s restructure and it is from this that the phrase “Ghosn shock” was coined. It is this type of shake-up that battery manufacturers now fear as news surfaces that Nissan plans on engaging Hitachi to supply the company with lithium-ion batteries — this is despite Nissan’s own joint venture with NEC Group, who also manufactures lithium-ion batteries. Hitachi’s lithium-ion batteries are rumoured to be destined for a couple of Nissan’s green vehicles, namely the Altima and Pathfinder models.
It is not surprising that Nissan is looking for ways to reduce the cost of their production of eco-friendly cars, given electric car sales to date haven’t been wonderful. Where there is reduced costs of manufacturing, there is the opportunity for bringing down the retail price, and that could in turn boost consumer interest and turn around the lagging sales trend.
There is little doubt that, should Nissan pursue Hitachi’s cheaper battery option, then other battery suppliers will feel the pressure to reduce their prices to compete, and that could spark an industry-wide shake up. Battery manufacturers have been poised for the eco-friendly car market explosion only to watch on as carmakers failed to realize projected sales. Indeed, many battery manufacturers had a very optimistic view of the type of sales volume they might see as a result of growth in the green car industry, but instead they are facing an oversupply problem and a potential “Ghosn shock” in their sector.
Furthermore, Japan’s government is aiming high with its sights set on 50% market share of storage batteries worldwide by the time 2020 comes around. This would be an additional seventeen percent on their current share of thirty three percent. Whether this goal is realistic or not is yet to be seen. However, battery suppliers the world over are vying for a large piece of the market and are prepared to fight it out over price, with Nissan spurring them on from the sidelines now, it would seem.
Time will tell exactly what it Nissan will do next, but we are certain that every carmaker and battery manufacturer is watching closely with baited breath and even quietly preparing for a “Ghosn shock” reorganization, and perhaps that’s just what the industry needs.