STORAGE STRATEGY, JAPAN-STYLE

Japanese Energy Solutions: ITOCHU's US Investment in EnerDel and Global Battery Development Strategy
Keith W. Rabin, August 2, 2010 (KWR International)

" …ITOCHU Corporation has been active…[in the] development of advanced batteries for electric vehicles…This includes an investment in, and close cooperation with EnerDel, a promising US manufacturer of commercial-scale automotive-grade lithium-ion battery systems…"

[Hiroaki Murase, Battery System Section Manager, ITOCHU:] “…[O]ver the next 5-10 years, we plan to significantly enhance alternative energy and the "green" side of our business…[and] energy storage in particular. This includes batteries, solar and water-related businesses…ITOCHU is a large company that is highly diversified in the energy field. We are also initiating activities in other areas such as Geothermal and Biofuels, including sugar-cane based ethanol in Brazil and biomass in North America…Development of the Smart Grid is also a priority."

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[Hiroaki Murase, Battery System Section Manager, ITOCHU:] “Our primary goal is to enhance the strategic energy storage value chain around battery development. Jointly with ITOCHU's Chemical Department we are starting Cathode materials projects in the US and China…to better engineer and produce a viable power train and charging station and to better use the auto battery for a range of applications. This will help to reduce costs and to enhance the usability of lithium-ion batteries in a larger market.”

[Hiroaki Murase, Battery System Section Manager, ITOCHU:] “An integrated approach within a range of areas as well as government involvement is very important. For example, there is a smart grid team in our headquarters that is working on a smart grid development project in New Mexico that the state has initiated…EnerDel also has joined Indiana-based Energy Systems Network (ESN), which consists of Duke Energy, Cummins Delphi, IBM, Simon Properties, Purdue University and other concerns dedicated to advancing hybrid and plug-in vehicles and other energy innovations to consumers.”

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[Hiroaki Murase, Battery System Section Manager, ITOCHU:] “The key difference in our approach is products and point of view [is that first] we need to decide where to set up battery production. The potential for electric vehicle (EV) penetration in 2020 is amazing. So we have to think back from there as to how to service and finance our activities at that time. China has established an ambitious target for EVs. According to Deutsche Bank, in 2020 annual EV demand in the US will be about 700,000 vehicles out of about 15-16 million total vehicles. In China it will run about ten percent, or 1.7 million out of 19 million total at the same time…So we have to seriously think about our Chinese strategy. We are doing this now both at EnerDel and ITOCHU.”

[Hiroaki Murase, Battery System Section Manager, ITOCHU:] “ITOCHU is moving to become a global company…I was the only Japanese person at EnerDel when I was there, and I learned a lot from that experience…ITOCHU is trying to let the younger generation experience that type of environment…Japan is a small market with an aging population and as a result we need to seek opportunities and expand around the world. But it is important for companies who wish to partner or do business with us to do their homework…[A factor that] differentiates us from American and European firms…[is that] Japanese companies need consensus to proceed. It is not enough to convince one senior decision maker. You need to convince the whole team. That takes more effort and time, but it pays off in the end as it brings more stability into the process…[and] a greater chance of success…”