Prelude to a leap into EV batteries

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Johnson Controls International’s battery business may have a new owner, but Power Solutions, as the unit is known, won’t change its market strategy.

After last week’s $13.2 billion sale to Brookfield Business Partners, Power Solutions President Joe Walicki says he will not chase his rivals into the global market for electric-vehicle batteries — something many in the industry probably assume is his logical next step.

Walicki: Low-voltage batteries

“We will not participate in the high-voltage market,” Walicki said of the EV segment. “The big consumer electronics suppliers are in that space. Our space is low-voltage batteries.”

Instead, Walicki is sticking with his $780 million plan — already underway — to boost worldwide production of an emerging technology known as absorbent glass mat batteries, which are improved lead-acid batteries optimized for vehicles with stop-start systems.

Power Solutions’ business outlook could be a pointed warning for suppliers investing in EV battery production. Walicki, whose business produces one-third of the world’s car batteries, simply doesn’t believe EV batteries are profitable.

Sticking to the plan

Power Solutions (Johnson Controls International)

  • Headquarters: Glendale, Wis.
  • President: Joe Walicki
  • Products: Automotive starter batteries
  • Employees: 15,000
  • Buyer: Brookfield Asset Management Inc./Brookfield Business Partners will pay $13.2 billion for the business by June 30.

Johnson Controls’ battery division generated sales of $8 billion in fiscal 2018, up 9 percent year on year. And while the operation will have a new owner, Johnson Controls is assuring customers that little will change.



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Last week, Johnson Controls CEO George Oliver said Power Solutions likely would remain headquartered in suburban Milwaukee. And Walicki seems likely to retain his job.

“I can’t say exactly what my role will be, but I love the business,” Walicki said. “My conversations with Brookfield have been productive.”

If Walicki stays, Power Solutions will likely stick to its knitting. The company is making a big bet on absorbent glass mat batteries, which are durable enough to restart a vehicle’s engine dozens of times a day, a key feature for vehicles with stop-start systems.

Walicki’s strategy of boosting production capacity for the technology is unfolding as the U.S. government seeks to roll back U.S. fuel economy standards.

Some observers speculate that the potential change in EPA regulations could cause automakers to delay plans for more fuel-efficient technology, such as stop-start, regenerative brakes and electrically powered turbochargers. But Walicki sees it differently.

Who’s right?

He expects burgeoning demand for infotainment, connectivity and collision avoidance to escalate a vehicle’s electricity consumption.

An absorbent glass mat battery paired with a 48-volt electrical system can meet those needs, Walicki says. “Safety, connectivity and infotainment are moving from high-end vehicles to mass-produced vehicles,” he said. “It’s what consumers want.”

It will take a decade or so to see whether Walicki was right to opt out of the market for high-voltage EV batteries.

Big rivals such as consumer electronics makers Panasonic and LG Chem are aggressively expanding into the EV battery market. Panasonic, for example, has invested $1.6 billion in Tesla’s Gigafactory in Nevada, and it says it is willing to spend more.

Walicki concedes that full EVs and plug-in hybrids could account for 8 to 10 percent of global vehicle production by 2025.

But he also expects production of vehicles with internal combustion engines to increase through 2030 and beyond, guaranteeing robust demand for his new-generation batteries.

“We’re bullish — absolutely bullish,” Walicki said. “Cars will have low-voltage batteries for many years to come.”

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