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Rumours abound over Nissan battery unit sale

AESC's Leaf Battery Pack

Recent reports suggest that Nissan could be offloading its majority stake in battery manufacturing unit Automotive Energy Supply Corporation

Fierce competition over the production of better and cheaper lithium-ion batteries is beginning to take its toll on some of the automotive sector’s biggest players.

According to an August 5 report by Nikkei, Japan’s Nissan Motors is looking to offload its majority stake in Automotive Energy Supply Corporation (AESC), signalling the company’s withdrawal from battery manufacturing.

Nissan set up AESC in 2007, as part of a 51/49 venture with NEC Corp. It was established to research, develop and manufacture lithium-ion batteries for automotive applications, with the aim of supplying cells for the Nissan Leaf and other EVs. Yet, according to Nikkei sources, it may now be cheaper for the automaker to buy batteries, including those destined for use in the Leaf, from external suppliers.

Indeed, the Wall Street Journal reported that Renault-Nissan CEO Carlos Ghosn was in favour of Nissan using LG Chem technology for its next 60kWh battery, believing the Korean company to be sector’s leading supplier.

Rival battery-maker Panasonic is rumoured to be involved in acquisition talks for AESC, as are several Chinese firms.

A sale of the firm would be no small event for the EV and energy storage sectors; AESC currently holds 12% of the li-ion automotive battery market, making it the second-largest such supplier after Panasonic.

In an emailed statement to Reuters, Nissan said that news of the sale “is speculation, and is not based on any announcement by us.” Spokesmen for Panasonic and NEC also declined to comment on the news agency’s report.

The move may form part of a wider asset sale by Nissan, as sources told the news agency that it was also pursuing the sale of its 41% stake in Calsonic, an automotive parts supplier.

While Japan will likely be distraught at the giving up of manufacturing ground to South Korean and Chinese rivals, consolidation is likely to be broadly positive for the sector. Indeed, a shift in Nissan’s strategy towards cheaper, higher-density batteries can only be a better sign for its flagship Leaf (and its future EVs) as it looks to chase rival automakers, particularly Volkswagen and Toyota.

 

Time for a new Leaf?

Ultimately, it would seem that the Leaf’s poor sales growth is most to blame for the sell-off. Although over 225,000 units have been sold as of June 2016, sales global have fallen over the past few years, down from 61,500 in 2014 to under 44,000 in 2015. The outlook for the rest of this year doesn’t look much better.

With the announcement of the Tesla Model 3 late last year, consumer appetite for the Leaf seems to have diminished. Despite the promise of a larger battery and greater range from a 2017 Leaf, customers are opting to wait longer for the promise of a Tesla, and are unlikely to be swayed.

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