The race to get batteries is very real for automotive companies. Supplies are limited, and will continue to be limited for years because you can’t open up new mines and refining facilities with heavy doses of wishful thinking. It takes years to get a new mine going, and that means manufacturers need to think years ahead.
But, as I’ve pointed out before, Japanese auto manufacturers are in a tough spot when it comes to depending on rare earth minerals and battery minerals that largely come from China. This backdrop is important to understand, as the Japanese government has realized that it will have to be more proactive in developing its own clean energy technology and being more competitive in other areas if it hopes to keep up with China. According on Quartz, China’s grip on the minerals that drive not just clean technologies but also a variety of other crucial things like medical imaging came to a head for Japan in 2010 after a territorial dispute. By cutting off supplies, China was able to bring Japan to its knees. This might explain why Japanese carmakers are sticking with hydrogen technology while the rest of the world goes with battery-electric vehicles (BEVs).
In addition to the geopolitical issues at play is the US response in the latest version of EV subsidies. In order for an electric vehicle’s battery to qualify for tax credits and rebates in upcoming years, it will need to be sourced from minerals that come from countries that are not China — a country which American government has grown increasingly wary of. This could lead to more plug-in hybrid (PHEV) vehicles on the road, but exactly how many credit-eligible BEVs can be built depends largely on whether or not we have a sufficient supply friendly countries’ batteries.
We’ve seen other Japanese companies, especially Toyota, adopt a very cautious approach to EVs. An interview at CarBuzz with a Toyota executive shows us their thinking, and it goes beyond supply issues and geopolitics. They’re committed to electrification, but they’re not committed to going all-in on BEVs (or “pure EVs”). They’re going to focus on whatever technology they think best fits the customer’s needs, including PHEV and hydrogen. Toyota offers a wide range of cars to appeal to different markets. Toyota should be able maintain the required changes in each sector by offering variety and diversity in its products.
Honda has, until very recently, been on a similar trajectory. I’ve called them boneheads at least once for not taking EVs seriously, just like Toyota. More recently, the company seems to have realized that the US market is going to go heavy for EVs, and has partnered with GM to get back on track, but it is still not offering much and its own non-GM offerings are still years away, and it’s just a promise.
At the same time, though, we’ve seen Nissan be a bit of a pioneer in BEVs, even if they’re in an environment that doesn’t favor them. Nissan beat Tesla to market with an electric sedan (the first-gen LEAF beat the Model S to market), and offered it at a much more affordable price point, even if it had far less range, among other things. So, gauging where exactly Nissan is on electrification can be challenging, because it’s not afraid to break from the pack at times on EVs.
A New Mineral Deal Offers Some Clues
I can’t predict with certainty whether Nissan will go serious about quality EVs going forward, but we can look for clues on their long-term thinking. As I mentioned above, you cut deals on battery supplies (and battery minerals) years in advance or go without.
Nissan revealed in a press release that it has completed a definitive agreement to acquire shares in Vehicle Energy Japan Inc. (VELI), a firm involved in the automobile lithium-ion battery sector. After regulatory procedures, including necessary approvals and permissions, are completed, Nissan will purchase the stocks.
Nissan will acquire all of Vehicle Energy Japan’s common shares, as well as subscribe to the company’s common shares. Following the merger, Vehicle Energy Japan will become a Nissan subsidiary in which it will share ownership with existing shareholders Maxell, Ltd. and Hitachi Astemo, Ltd.
Nissan tells us that Vehicle Energy Japan has an integrated battery supply chain from cells through packs, as well as sophisticated battery management systems. It develops, produces, and sells lithium-ion batteries, module batteries, and battery management systems for electric vehicles in the future market.
Nissan also let on a bit about what the strategic importance of this purchase is. Nissan says, in its long-term vision, Nissan Ambition 2030, that it aims to create significant value beyond mobility by placing electrification at the core of its business strategy and expanding the possibilities of journeys and society. Vehicle Energy Japan will be a critical component in Nissan’s plans to further electricize its lineup as a major supplier to Nissan. The investment will enable Nissan to secure a dependable battery supplier and contribute to the advancement of next-generation batteries with a competitive edge in terms of both performance and cost under the vision. Vehicle Energy Japan will provide a constant supply of batteries to Nissan, as well as other clients, thanks to Maxell, Hitachi Astemo, and Nissan’s ongoing support.
What This Can & Can’t Tell Us
By grabbing control of more future battery supply, we can see that Nissan does seem serious about future EV models beyond the LEAF and the Ariya, which is good news. But, what we can’t learn from this deal is how much of the market they predict will be electric in 2030, and how much of that market they want to be the manufacturer for.
In other words, getting supplies is one thing, but getting enough supplies to make most or all of its vehicles BEVs (as opposed to PHEV or hydrogen) is another question entirely.
Hopefully this is a sign of more to come. But, if we’ve learned anything from the last decade of EV development, it’s to not make too many assumptions about what will happen in the industry, as it often changes rapidly.
Featured image provided by Nissan.
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