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Breaking up (might be) hard to do

John Day

John Day

Posted May 19, 2011
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It was fun while it lasted and quite rewarding for Johnson Controls-Saft (JCS), the advanced battery development joint venture (JV) involving Johnson Controls and Saft Batteries, but all good things come an end, and it appears as though the end may come in Delaware Chancery Court, where Johnson Controls filed suit to dissolve the JV the firms formed in 2006.

Saft says it will oppose the suit. It says it has made a number of constructive proposals to try to reach a compromise agreement, but those proposals were rejected. Saft believes some adjustments could be made to the JV agreement, but it said it would not be in Saft’s strategic interest to address through JCS certain lithium-ion markets where Saft is already strongly positioned and enjoys a rapid development.

That appears to be the sticking point for Johnson Controls.

“Johnson Controls and Saft have a fundamental disagreement about the future direction and appropriate scope of the joint venture,” says Alex Molinaroli, president of Johnson Controls Power Solutions. “The industry is evolving rapidly and the investments needed to achieve market leadership require us to do more than the joint venture has done or can do.”

Johnson Controls believes that as vehicle powertrain technologies continue to evolve and new markets emerge for advanced batteries, it must have access to multiple alternative technologies and be able to participate more broadly across the energy storage space.

Johnson Controls said its filing does not affect JCS’s current contracts, production orders, or program launches, but there will be quite a bit of sorting to do if the legal proceedings result in a breakup.

JCS claims to have been the first to mass produce automotive quality lithium-ion batteries for vehicles. In addition to production contracts with Daimler, BMW, Chery, and Azure, JCS has announced development contracts with Ford, GM, and SAIC, and said it has unannounced projects in the works with almost every major automaker.

Just last month JCS announced that it will supply the complete battery system for two electric vehicle platforms to be launched by the Beijing Electric Vehicle Company (BEVC), a subsidiary of Beijing Automotive Industry Company (BAIC). BEVC and BAIC have plans to manufacture 150,000 hybrid electric vehicles (HEVs) and battery electric vehicles (BEVs) by 2015.

It will be interesting to see how things sort out.

Johnson Controls-Saft, Johnson Controls, lithium-ion batteries, Beijing Automotive Industry Company, Beijing Electric Vehicle Company, Azure, Saft Batteries, Ford, GM, SAIC, Daimler

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John DayJohn Day recently launched John Day’s Automotive Electronics News (johndayautomotivelectronics.com) to provide news and feature coverage of the automotive electronics industry. Earlier he wrote for Auto Electronics magazine, Auto E-lectronics, EE Times, and other business and engineering publications. Visit John Day

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