The joint venture between industrial company Johnson Controls (s JCI) and French battery maker Saft to sell lithium ion batteries to the automotive sector has gone sour, with Johnson Controls asking a Delaware Court on Wednesday to dissolve the JV. According to analysts with Needham & Company, Johnson Controls is unhappy because the Saft deal is restricted to automobiles and the partnership is holding it back from pursuing a broader focus on selling batteries for the power grid, a multi-billion dollar market that seems to be growing substantially recently.
In particular, Needham & Company write in their report, that Johnson Controls could pursue an expanded partnership, or even a new joint venture, with Hitachi, a company which Johnson Controls already has signed a memorandum of understanding with around energy storage applications. Needham & Company analysts support Johnson Controls action, as they say: “We believe the [Saft] JV terms and conditions have minimized the company’s efforts to develop a stationary storage market strategy, while competitors have been able to make headway into this large multi-billion opportunity.” The analysts also support a new JV with Hitachi:
The formation of a JV with Hitachi could enable Johnson to cover more bases in the evolving lithium-ion (li- ion) landscape given Hitachi’s penetration into the heavy-duty market and focus on stationary applications.
We’ll see if Johnson Control’s legal actions are successful. Saft says that it will oppose the breakup, and “sees no legitimate grounds for the dissolution.” Saft saw a drop in its stock by as much as 17 percent on the news of the dissolution petition, reports Bloomberg.
The joint venture between Saft and Johnson Controls was established back in 2006 and in 2008 the group opened up a lithium ion factory for hybrid and electric vehicles. At first the JV announced high profile auto customers like Mercedes, BMW and Ford. But over time competitors like LG Chem have overtaken the JV in hybrid and electric vehicle customer wins.
Using lithium ion batteries as stationary energy storage for the power grid has emerged as a quickly growing market. Power company AES (s AES) is developing the largest lithium ion battery energy storage projects in the world, with 32 MW and 40 MW projects, and AES has worked with newcomer A123 Systems (s AONE). Electric Power Research Institute (EPRI) has pegged 2012 as a turning point for grid energy storage because by then companies that have collectively received more than $250 million in federal stimulus funding are expected to complete research and development work and move into field trial stages in the U.S.
At the same time, batteries for electric vehicles have seemed to be growing slower than some had predicted. Lithium ion battery company Ener1 wrote down its investment in Norwegian electric car maker Think, citing the fact that Think had halted its vehicle production in Finland for longer than expected, has been unable to raise the funds needed to continue production, and because the overall market for EVs has been moving slower than expected. A123 Systems also recently posted a $53.6 million loss for its first quarter 2011 financials, in part because it’s just not making money off of EV deals yet.
Image is of AES’s lithium ion battery power grid project, courtesy of AES.