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Clean Power carlos ghosn shock lithium ion batteries

Published on September 13th, 2012 | by Zachary Shahan


Fears Grow as Battery Manufacturers Face Potential “Ghosn Shock”

September 13th, 2012 by  

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.

carlos ghosn shock lithium ion batteries

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.

Source: Autoblog Green
Image: Carlos Ghosn, via World Economic Forum

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About the Author

Zach is tryin' to help society help itself (and other species) with the power of the word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession and Solar Love. Zach is recognized globally as a solar energy, electric car, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, and Canada. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in. But he offers no professional investment advice and would rather not be responsible for you losing money, so don't jump to conclusions.

  • josetony

    How about giving a $50 million prize to a company or individual that could come out with a battery package that could be sold at $10,000 or less and could give a electric range of over a 100 miles to an EV.

    • Bob_Wallace

      Those sorts of prizes are great motivators but we probably don’t need one for EV batteries. Whomever can develop a better battery is going to make an incredible fortune. $50 million will be chump change.

      We may already have a winner. Envia says that they have a lithium-ion battery that will hold more than three times as much power (400 watt-hours per kilo vs. 120 for current batteries). They state that it will cost less than half as much ($150/kW vs. $400/kW).

      Their batteries have already been tested at *US Navy Naval Surface Warfare Center Crane Division and the capacity claim proven.*
      *Right now their batteries have undergone over 450 discharge cycles with <25% capacity loss. In a 200 mile EV that's a 90,000 mile battery. They think they can get to 1,000 discharge cycles by the time they go into production.*
      GM recently partnered up with Envia in some form or another. Envia has stated that they don't intent do manufacture but to license to existing battery manufacturers.

      We should know soon….

  • What depress the sales is expected fast evolution and resulting fast obsolescence of an item expected to last a decade. The performance of EVs is not measured against their useful life, but against cost of an advanced, next year model.

    • Bob_Wallace

      There may be some truth to that, especially now that we are reaching the end of the model year.

      GM has hinted at a range increase and rumors are floating about lower prices and longer ranges for the Leaf.

      A couple of weeks ago I heard about some Leaf dealers offering significant deals on their remaining stock. Made me wonder if GM wasn’t trying to get the remaining Leafs on the road for lower prices so that those buyers wouldn’t be as unhappy about new model range/price.

      Don’t know if any of that is true, but their existence would cause me to wait and see. EVs and PHEVs are still so limited and expensive that small improvements can be significant.

      For a few years we might see most sales occur in the early model years with significant drop off in later months. My new vehicle buying strategy is to wait for the new models to be out for a month or two and then look for a left-over unit from the previous year. That works fine when year-to-year changes are minor, but electrics are likely to show larger year-to-year changes.

  • Anne

    “given electric car sales to date haven’t been wonderful.”

    Well, that is depending on where you look. Tesla Model S has 13,000 reservations and is sold out until next summer.

    • Bob_Wallace

      The Volt and Leaf have done better in their first year than the Toyota and Honda hybrids did in their first year.

      It’s so “in” to be negative. Cynicism is misinterpreted as a sign of intelligence….

      • “It’s so ‘in’ to be negative. Cynicism is misinterpreted as a sign of intelligence….”
        -Very well said.

    • Ross

      Talking down EVs is so short sighted. It doesn’t take a genius to figure out we’re at the early stages of exponential growth for this category of vehicle.

      • Bob_Wallace

        I’ve lived through a number of technology shifts starting way back with slide rules to calculators and tubes to transistors. Typewriters to computers. CRTs to LCDs. Film to digital.

        There’s a consistent pattern. The initial offering is ‘barely good enough’ and expensive. All the “Man will never fly!” critics start talking about how technology won’t change. But it does. Change starts slow, rates accelerate, and in a few years change is complete.

        If you’ve ever worked on an engine you’ll know that there are hundreds of carefully designed, manufactured and installed unique parts. It takes a lot of specialized materials and energy to make those parts.

        EV batteries are butt-simple. Take some chemical and stuff and put them in a container. Do that over and over hundreds of times. No really expensive materials and not huge amounts of energy inputs. There’s no machining. A flock of identical automated machines can pump out a stream of identical “parts”.

        EV batteries have a huge cost advantage over internal combustion engines. It’s just a matter of getting battery manufacturing operating at scale and ICEVs will likely be priced out of the market.

  • Bob_Wallace

    I suspect this is a good move. Prices need to come down soon.

    Some manufacturers might be forced out, but that happens with all manufacturing. There is a very long list of computer manufacturers who fell by the wayside when someone else ate their lunch.

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