TOKYO (Bloomberg) -- Mitsubishi Motors Corp.'s battery-making venture with GS Yuasa Corp. is considering producing lithium-ion cells in Europe as demand in the region for electric cars grows.
Lithium Energy Japan aims to reduce transportation costs by adding a new plant overseas, President Katsuyuki Ono said in an interview in Kyoto, where the company is based.
“While it's not easy to shift our production operation for core parts, we plan to make other parts overseas and we've completed our research,” Ono said without elaborating.
The company, which makes batteries for Mitsubishi's i-MiEV electric car, aims to win more orders from European carmakers by adding production nearby amid intensifying competition. The market for lithium-ion batteries used in electric, hybrid and plug-in hybrid cars will grow to 1.7 trillion yen ($18 billion) in 2020 from almost zero in 2009, Daiwa Securities Capital Markets Co. said in a March 23 report.
“It's likely they will reach full domestic capacity earlier than expected,” said Jun Yamaguchi, a Tokyo-based analyst at Credit Suisse Group AG. Adding production in Europe will enable Lithium Energy Japan to produce batteries more efficiently, he said. “By producing overseas they can cut costs.”
Toyota Motor Corp.'s Prius, the world's best-selling hybrid car, uses nickel-metal hydride cells. Mitsubishi Motors holds a 15 percent stake in Lithium Energy Japan.
U.S., Europe sales
Mitsubishi Motors said on March 30 it would start selling the i-MiEV to individuals in Japan this month and cut the price by 13 percent to 3,980,000 yen. The Tokyo-based carmaker plans to start selling the vehicles in Europe before the end of the year and in the United States in 2011.
PSA/Peugeot-Citroen, France's biggest carmaker, and Mitsubishi Motors last month agreed on electric-car development and supply.
The Paris-based carmaker will sell i-MiEV-based electric vehicles under the Peugeot and Citroen brands, Mitsubishi said March 8. Production will begin in October and European sales will start by the end of the year. The agreement covers 100,000 vehicles, the companies said.
Lithium-ion battery packs for cars cost slightly more than 2 million yen, Ono said. The price will probably drop to about 1 million yen when annual production is lifted to 42,000 i-MiEV cars, he said. Lithium Energy Japan, which started producing cells for the Mitsubishi car in June, plans to make batteries for 2,300 i-MiEV cars in the year to May 31.