Johnson Controls Buys Out Saft Joint VentureBy Danny King September 7, 2011
Battery-making giant Johnson Controls will end the lithium battery joint venture it started with Frances Saft Group SA. The partnership was begun in 2006 for the purpose of making advanced batteries for electric-drive vehicles. Johnson Controls will pay Saft $145 million for the French companys share of the joint venture as well as for the right to use certain technology developed by Saft. The transaction could close this month. "For Johnson Controls, this agreement further reflects our strategic commitment to the advanced battery industry," said Alex Molinaroli, president of Johnson Controls Power Solutions. "We will continue to leverage the progress we've made in this space, and can also now expand our full range of strategic capabilities around technology, systems, applications and business models."
Milwaukee-based Johnson Controls will retain control over the Holland, Mich., facility the partnership recently built. That plant is the first in the U.S. to produce complete lithium-ion battery cells and systems for hybrid and electric vehicles. Johnson Controls said in May that it would try to dissolve the partnership, saying at the time that the Johnson Controls and Saft had "a fundamental disagreement about the future direction and appropriate scope of the joint venture." The buyout reflects how Johnson Controls, the world's largest vehicle-battery maker, is looking to boost business by making products that enable light-duty vehicles to boost fuel economy. Johnson Controls said in late June that it would invest $138.5 million to convert its Toledo, Ohio, plant to a factory that produces start-stop systems, which save fuel by turning the engine off when the vehicle's not moving.
Johnson Controls said that such systems can boost fuel economy by about five percent while adding an average of just $800 to vehicle costs. By comparison, hybrid-electric vehicles, while boosting fuel economy by about 30 percent, on average cost about $5,000 more than similar conventional vehicles, the company said. Johnson Controls also expects the cost premium for start-stop systems to fall over the next few years while fuel-efficiency gains grow. Fuel economy gains from some stop-start systems could hit 10 percent by 2016, the company said at its annual analyst meeting in June.
Worldwide automakers have committed to making more than 40 million start-stop vehicles over the next five years. Including third-party vendors, the start-stop battery market will reach almost 100 million units by 2020, with Europe accounting for about half, and North America and China each accounting for about a quarter, according to Johnson Controls. The European market accounted for more than 90 percent of the start-stop vehicles made this year. Johnson Controls forecast 2011 sales of $39.5 billion, including $19 billion from an automotive experience division that makes components for seats, doors and cockpits; $14.5 billion related to energy-efficiency products specifically for buildings; and a power solutions division whose battery-making market share is more than three times the next biggest producer, Japan-based GS Yuasa.