Cleantech Market Intelligence
Korean-German Battery Venture: Haven’t We Seen This Before?
Last month the joint venture company formed between South Korean energy firm SK Innovation and German Tier One supplier Continental officially began operating. Under the agreement, originally signed in July 2012, the JV will conduct business under the name SK Continental E-motion. The new company has the potential to benefit from the expertise of SK Innovation in lithium ion battery cell manufacture, combined with the experience of Continental as a supplier to the world’s leading automotive OEMs.
But haven’t we seen this combination before? In June 2008, a JV called SB LiMotive was created with much fanfare. Jointly owned by Korean battery manufacturer Samsung SDI and German supplier Robert Bosch, the company was set to become a major player supplying battery packs for the emerging market in hybrid and electric vehicles. Acquiring the assets of U.S. battery manufacturer Cobasys in July 2009 along with development agreements with BMW and Fiat appeared to cement the relationship and give the company a solid foundation.
In December 2012, though, Bosch announced that the JV, which was not generating profits after 4 years in operation, had been formally dissolved and that it was setting up Robert Bosch Battery Systems as a subsidiary to focus on building battery packs for electric and hybrid electric vehicles.
Battery cell manufacture capability joined with Tier One expertise would seem like a powerful combination to capitalize on the growing market for onboard electrical energy storage, but as we’ve seen, it’s not without risk. For SB LiMotive, perhaps the market simply didn’t grow quickly enough, and the different philosophical approaches of the two owners were so far apart that a split was the only option. SK Continental E-motion will likely face the same situation in a few years if it does not begin showing a profit.
Still, there’s potential for success despite the experience of its similar predecessor. The market for EVs has matured in the last 4 years, and expectations are now much more realistic. The stated focus on 48V stop-start systems could lead to rapid growth ‑ provided that at least some of the major OEMs adopt the technology.