As Japan-based Nissan Motor Co. has decided to sell off its electric vehicle (EV) battery subsidiary, Automotive Energy Supply Corp. (AESC), to a Chinese renewable energy firm Envision Group, expectations are growing that South Korean EV battery companies, including LG Chem Ltd., will be able to secure a new market.
According to industry sources on August 19, Nissan Motor has recently announced that it will sell off its EV battery manufacturing business division to Chinese wind turbine giant Envision Group.
The division includes its subsidiary AESC and battery manufacturing operations in Smyrna, Tennessee, owned by Nissan North America, as well as operations in Sunderland, England, owned by Nissan Motor Manufacturing. Envision Group will also purchase Nissan’s Japanese battery development and production engineering operations located in Oppama, Atsugi and Zama.
Nissan jointly set up AESC with NEC Corp. in 2007. AESC has become the fifth largest battery producer in the world after it supplied batteries to the Nissan Leaf EV. Nissan holds a 51 percent stake in AESC, while NEC owns a 49 percent stake. To complete the deal, Envision Group will first purchase 25 percent out of a 51 percent stake in AESC owned by Nissan and then the rest later.
Envision Group announced that it would retain the current employees and all business divisions and development centers as well as establish a new division in charge of battery production where Nissan holds a 25 percent stake. Last year, Nissan tried to offload AESC to GSR Capital, a private investment fund based in China, but that transaction fell apart last month as GSR failed to make a payment of US$1 billion (1.12 trillion won).
Market experts say that Nissan has decided to sell off its EV battery subsidiary to focus more on developing and producing market-leading electric vehicles. In fact, the battery manufacturing business division has the largest size in the automotive lithium-ion battery sector. However, there is a possibility that LG Chem’s battery can be used in the new Nissan Leaf E-Plus to be released next year. Nissan is now looking for a new supplier.
Accordingly, all eyes are on which batteries will be used in Nissan EVs to be launched in the future. The industry thinks that Nissan is more likely to be supplied with batteries from AESC for a certain period of time because it said it would keep holding a 25 percent stake in AESC even after selling it off to Envision Group. However, it believes that Nissan is highly likely to diversify its battery suppliers in the long term.
In this case, not only domestic EV battery makers, such as LG Chem and Samsung SDI Co., but also foreign ones, like China’s Contemporary Amperex Technology Ltd. (CATL), will have a new market. However, many experts think that LG Chem will be the one that will win the new client. This is because LG Chem supplies EV batteries to Renault Samsung Motors Corp., one of the mainstays of the Renault-Nissan alliance.
Meanwhile, LG Chem has recently signed a deal with China-based lithium producer, Jiangxi Ganfeng Lithium, to receive lithium hydroxide, one of the core raw materials in the production of EV batteries. In a bid to secure a large quantity of lithium hydroxide, the firm had also signed a deal with Canada's Nemaska Lithium in June, securing 35,000 tons of lithium hydroxide. The two deals enable LG Chem to receive a total of 83,000 tons of lithium hydroxide that is capable of producing batteries for 1.7 million high-energy EVs.