Intensifying price competition from South Korean
battery manufacturers has driven Sanyo Electric Co. and GS Yuasa Corp. to dissolve their long-standing lithium-ion battery joint venture (JV). According to a joint announcement, the liquidation of the Sanyo GS Soft Energy Co. JV was inevitable as the venture had posted net losses for two years running. The decision to dissolve the JV may hinder Sanyo's ability to collect loans valued at 4 billion yen ($47.5 million U.S. at the current exchange rate) and will force GS Yuasa to report a special loss of 3 billion yen ($35.6 million U.S.). Neither Sanyo nor GS Yuasa intends to modify their projected earnings outlooks for 2010.
GS Yuasa's numerous JVs with automakers
such as Honda
imply that the company has no intentions of leaving the li-ion battery industry. Meanwhile, Sanyo's split with GS Yuasa will not affect its existing deals with automakers
and battery producers
, nor should it impact Sanyo's long-term goals
of increased li-ion battery production
. In the automotive industry, mergers and breakups are inevitable and we're sure that neither Sanyo nor GS Yuasa will shed tears over dissolving this money-losing JV.