Identifier
Created
Classification
Origin
09OSAKAKOBE76
2009-05-07 02:37:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Osaka Kobe
Cable title:  

GS Yuasa: Economic Downturn Assault on Lithium

Tags:  BEXP EINV ENRG ECON JA 
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UNCLAS SECTION 01 OF 02 OSAKA KOBE 000076 

SENSITIVE

SIPDIS

COMMERCE FOR ITA BRICKMAN AND SANTILLO

DOE FOR PI BISCONTI AND EE CHALK AND KIMBIS

E.O. 12958: N/A
TAGS: BEXP EINV ENRG ECON JA
SUBJECT: GS Yuasa: Economic Downturn Assault on Lithium
Ion Battery Producer

OSAKA KOBE 00000076 001.2 OF 002


UNCLAS SECTION 01 OF 02 OSAKA KOBE 000076

SENSITIVE

SIPDIS

COMMERCE FOR ITA BRICKMAN AND SANTILLO

DOE FOR PI BISCONTI AND EE CHALK AND KIMBIS

E.O. 12958: N/A
TAGS: BEXP EINV ENRG ECON JA
SUBJECT: GS Yuasa: Economic Downturn Assault on Lithium
Ion Battery Producer

OSAKA KOBE 00000076 001.2 OF 002



1. (SBU) Summary: Tucked into a corner of Japan's
cultural center of Kyoto is GS Yuasa Corporation (GSYC),
a cutting edge producer of new greener battery
technologies for use in hybrid and electric vehicles.
GSYC's research ventures and projects with widely known
companies such as Honda, Mitsubishi Motors, Sanyo, NASA
and Boeing indicate high regard for the company's prowess
in battery technology. However, GSYC has attempted to
pour more resources into its lithium-ion battery
production for use in hybrid and electric vehicles just
as its revenue streams have been cut by the economic
downturn and especially the downturn in the automobile
industry. Compounding GSYC's revenue stream challenges,
the company is the contract supplier for Boeing's delayed
787 Dreamliner project. End Summary.


2. (SBU) Formed by merger in 2004 of two of Japan's
oldest battery companies, Nihon Denchi Corporation and
Yuasa Corporation, GS Yuasa Corporation (GSYC) operates
worldwide and maintains several U.S. subsidiaries,
including Georgia based GS Yuasa Lithium Power. Still
the world's third largest supplier of lead-acid
automotive batteries, the company produces a variety of
unique battery lines including batteries for use in
satellites, airplanes and deep sea submarines and GSYC's
business has steadily shifted away from lead-acid
batteries into lithium-ion batteries, currently the most
advanced battery technology, highly sought after by
automakers. The percentage of the company's annual
investment in lithium-ion batteries jumped from eight
percent in 2008 to 31 percent in 2009.


-------------- --------------
Joint Venture Partners: Honda, Mitsubishi and Sanyo
-------------- --------------

3. (SBU) In 2009, GSYC established a joint venture with
Honda Motors to develop and produce lithium-ion batteries
for Honda's second generation Civic hybrid and its next
generation hybrid vehicles. GYSC officials told us that
the goal of the joint venture is to produce lithium-ion
batteries that are more compact, lightweight and powerful

than existing batteries, but at greatly reduced
production costs in the range of US 50 cents per watt,
one fourth of the current cost of Y200 per watt (USD$2).
(Note: Sanyo Electric Company supplied batteries for the
Insight, Honda's first hybrid vehicle, but Sanyo's merger
with Panasonic, the supplier of batteries for Toyota
hybrid vehicles, likely played a role in Honda's decision
to shift to GSYC as its supplier. End Note.)



4. (SBU) In a separate joint venture project with
Mitsubishi Motors Corporation (MMC) and its parent,
Mitsubishi Corporation, GSYC began mass production of
lithium-ion batteries in August 2008 at its subsidiary,
Lithium Energy Japan in Shiga Prefecture. The batteries
produced at the Shiga plant will be used to power MMC's
plug-in electric vehicle, the MiEV, that press reports
suggest will be launched as early as summer 2009.
However, according to Katsuyuki Ono, Managing Director of
GSYC and concurrently, President of Lithium Energy Japan,
MMC will begin commercial production of the MiEV in 2010
or 2011. He told us that MMC believes it must first cut
the current production price of approximately Y4 million
(USD $40,000) in half for successful commercialization.
A plug-in EV, the MiEV's batteries can be fully recharged
in seven hours at 200V (15A) electricity or 14 hours at
the standard currency output in Japan of 100V (15A).


5. (SBU) GSYC officials highlighted that its joint

OSAKA KOBE 00000076 002.2 OF 002


ventures with Honda and Mitsubishi are not exclusive and
stressed that the company is happy to supply its
batteries to U.S. automotive companies or to other
commercial users. They were roundly dismissive of Ford's
selection, in February 2009, of Johnson Controls-Saft as
the supplier of lithium-ion batteries for its plug-in
vehicle. GSYC officials also told us that they expect
the company's joint venture work with Sanyo developing
lithium-ion batteries for use in cellular phones, digital
cameras, and portable audio sets will continue even after
Sanyo mergers with Panasonic, the supplier to Toyota and
GSYC's competitor in lithium-ion batteries for hybrid and
electric vehicles.

--------------
Elite Supplier to NASA and Boeing, but . . .
--------------

6. (SBU) NASA and Boeing use GSYC's lithium-ion batteries
in its satellites and aircraft, and GSYC officials
proudly showed us the largest lithium-ion battery in the
world, specifically designed for use in Boeing B787
Dreamliner. Manager of the Corporate Strategic Planning
Division, Ken Sawai added however, that the long wait for
start of commercial production of the B787 has greatly
affected GSYC's revenue flows. However, GYSC's
transition toward becoming a supplier of cutting edge
lithium-ion batteries is now firmly established. During
the recent economic downturn, GYSC officials have noted a
growing gap in revenue between newer business areas in
which demand is still booming, such as lithium-ion
batteries for electric vehicles and hybrid electric
vehicles, and its older business areas such as lead-acid
automotive batteries and small lithium-ion batteries for
use in cellular phone, digital cameras and similar
commercial products.

DONG