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Honda, GS Yuasa to Build Batteries for Hybrid Vehicles

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Despite a looming crisis in the auto sector, Japan’s Honda Motor (s HMC) is pushing ahead with plans for the next generation of cars, signing a deal with Japanese battery maker GS Yuasa to form a ¥15 billion ($170.7 million) joint venture for the development of lithium-ion batteries for hybrid vehicles.

The announcement comes the same day that Honda slashed its annual earnings estimate for the third time this year, citing a sharp sales downturn amid the global credit crunch. The company now expects ¥185 billion in earnings for the year ended March 31, 2009 — less than a third of what it earned in its last fiscal year.

Norwegian electric car maker Think also announced some bad news this week, halting production and saying that it needed $14.5 million to $29 million in state aid to keep the company operating. And the potential collapse of one or more of the Detroit Big Three, which could have devastating repercussions for the entire auto industry, took a turn for the worse last week after the failure of a bailout bill on Capitol Hill.

The new battery venture, which has yet to be named, will be majority owned by GS Yuasa at 51 percent, with Honda holding the remaining 49 percent. The companies said they expect to get the venture up and running in the spring of 2009, using the new group to manufacture, sell and conduct research and development for high-performance lithium-ion batteries.

The venture will set up shop in Kyoto, where GS Yuasa is based, and manufacture batteries based on GS Yuasa’s EH6 battery line. Honda and GS Yuasa said they plan to boost the performance of the batteries for next-generation hybrid vehicles by looking at elements including the battery structure and the electrode materials.

Last year, GS Yuasa formed a similar joint venture with Mitsubishi and Mitsubishi Motors. That venture, called Lithium Energy Japan, is targeting mass production of lithium-ion batteries for use in applications including electric and hybrid vehicles.