Batteries’ reliability

Technology Report

ESPEC Models Associated with Trends in the Automobile and Battery Industries

Dr. Noboru Sato, Executive Adviser, ESPEC CORP. Visiting Professor, Green Mobility Collaborative Research Center, Nagoya University

Introduction Toyota Motor Corporation and Mazda Motor Corporation are strengthening their business partnership, and Toyota’s hybrid vehicle (HV) technology has been implemented in Mazda’s AXELA HV. In light of the increasing demand for development of HVs, plug-in hybrid vehicles (PHVs), and vehicles (FCVs), the development of new eco-friendly vehicle that run on alternative energy sources will require a significant investment and solid development teams as well as a long development period.

Japan’s “Big Three” (Toyota Motor, Honda Motor and Motor), with their financial strength, can afford the costs of developing proprietary technologies; however, for the smaller and medium-size automakers, the burden of developing multiple models of each type of alternative energy vehicle would be extremely challenging. Mazda decided to introduce Toyota technology when developing their HV and the FCV they will require in the future.

On the other hand, Toyota says it will borrow from Mazda’s area of specialization, fuel-efficient engine technology. Similar tie-ups in their international relationships are expected to drive progress in other companies in the market for eco-friendly vehicles.

The development of components, devices, and systems not used in conventional internal-combustion engine vehicles differs from the technological scope of most automakers. Therefore, merely relying on conventional expertise is insufficient for dealing with many factors such as fostering the skills of development teams, the development process, and R&D systems for new technologies. Success in addressing these areas depends on the strategies of each company.

Test Navi Report No. 18 (Vol. 82) 1 Batteries’ reliability

Battery technologies and battery systems are prime examples of such areas. In recent years, notable milestones have been achieved both at home and abroad in the areas of in-vehicle battery development, tie-ups between automakers and battery makers, and investments in international development.

By remaining in step with these trends and with achievements in industrial R&D, ESPEC’s business model is playing a major role in improving the development efficiency of the industry and ensuring product reliability.

１The Automobile Industry’s Efforts and Strategies regarding Eco-Cars

1.1 Japan’s automobile industry as the driving force behind in-vehicle batteries

The global growth of eco-friendly vehicles has been spurred by a combination of factors: ZEV (zero-emission vehicle) regulations in the U.S.A., strengthened EU regulation of carbon dioxide emissions, strengthened environmental regulations in China, and strengthened fuel-efficiency standards in major countries.

In parallel with this trend, electrification of automotive drive systems has progressed at a rapid pace, and the most important factor contributing to this trend is in-vehicle batteries. Japan has held the lead in the electrification of automobiles and will likely remain the leader well into the future. Of course, Japanese battery manufacturers maintain certain strengths and will continue to manifest their advantages going forward.

Toyota has advanced the development of key components at its R&D Center opened at the company’s base in Changshu, Jiangsu, China in 2011. Its R&D efforts evolved into China’s locally developed HV that hit the market in the autumn 2015. Sales started with the Levin and Corolla HV models equipped with nickel-metal hydride batteries. The implications of this launch are twofold: it will help lower the prices of these vehicles and curb the outflow of LIB technologies. Attention is being focused on whether these products will stimulate consumer sentiment in China.

By forming a market with eco-friendly products and offering customers direct value through reduced gasoline consumption, Toyota will develop a strategy for expanding its market share in China from the current 4%. Its target is to gradually expand its HV product line until the Test Navi Report No. 18 (Vol. 82) 2 Batteries’ reliability percentage of HVs reaches 30% of all cars sold in China by 2020. It is very possible that the company will attain this target.

Toyota will also roll out another model of (EV) by year-end through GAC Toyota Motor, its joint venture with Guangzhou Automobile Group. The Leahead compact model is a proprietary brand in China, and the company says it has been considering launching other EV models as well.

Behind Toyota's bold course is a Chinese government strategy to press forward with EVs. As Beijing put some support behind the formation of a market for EVs premised on large subsidies, the company has sought to ride on this wave. This movement is supported by political measures, and I do not think the company genuinely considers these activities to be efforts to help increase the numbers of EVs on the market.

In 1997, Honda launched an EV equipped with nickel-metal hydride batteries in California; and they have been working to expand their lines of HV, beginning with the first launch of HV in 1999. Furthermore, they have been aggressively promoting the release of PHVs and EVs into the market. The company will further strengthen its business by introducing the Accord HV, which employs the latest two-motor hybrid system.

Honda will also start HV production in Guangzhou, China in 2016. In addition to HVs, it plans to release PHVs on the Chinese market. The background to these moves is China’s tightening of fuel-efficiency regulations. Average fuel economy regulations will be tightened from 6.9 liters/100 km in 2015 to 5.0 liters/100 km in 2020.

Honda is chasing Toyota, the leader in HVs, and these two companies are making a strong showing in the HV field that will likely cause a radical shift in what motivates buyers in the Chinese market.

Cumulative sales of Nissan’s Leaf, its electric vehicle launched in 2010, have exceeded 200,000; however, the company currently carries only one line. In 2016, Nissan will release a successor model of the Leaf with a cruising range exceeding the current 228 km at a price lower than the current 2.87 million yen. It will also introduce a light-vehicle-based EV priced at the mid one million yen level developed jointly with .

Test Navi Report No. 18 (Vol. 82) 3 Batteries’ reliability

Although Nissan has been falling behind Toyota and Honda in the area of HV, it will add an HV model to its best-selling Note line in addition to its HV models of the high-end Fuga and Skyline. In this way it is following a strategy to boost the presence of its HVs.

The Renault-Nissan Alliance, a France-Japan partnership, has mapped out a plan to roughly double the cruising range of its existing EVs by 2020. Through this initiative, the Alliance intends to expand the share of EVs in its Nissan new car sales from the current level of just above 1% to approximately 10% by 2025.

Mitsubishi Motor introduced its i-MiEV EV in 2009, followed by the Outlander PHV in 2013. The company plans to introduce a PHV in the Chinese market within a few years. It will introduce the Outlander PHV through its joint venture, GAC Mitsubishi Motors, and will launch a demonstration experiment in the market.

1.2 Challenges facing eco-cars in South Korea’s automobile industry

In contrast to the above situation of booming eco-car development among Japanese automakers, South Korea has a smaller presence in every respect. The reasons for this are mainly twofold.

First, Japan’s “Big Three” have been developing eco-cars since the 1990s, when the ZEV mandate was first introduced. Because South Korea was not subject to this regulation, that country has fallen far behind Japan in eco-car development.

In 2003, development of in-vehicle lithium-ion batteries (LIBs) began at Samsung SDI, to which I transferred in 2004. Hyundai Motor started R&D of eco-cars around that time as well, which means they started about 10 years later.

Another factor is the corporate culture common to South Korean businesses. They focus on the business they are involved in, but give relatively low priority to basic research with a longer perspective. They tend to share the attitude that they will address these challenges all at once as they arise.

Hyundai Motor and its sister Group company Kia Motors are currently focused on eco-car development and marketing because they will finally become subject to ZEV regulations in 2018.

Test Navi Report No. 18 (Vol. 82) 4 Batteries’ reliability

South Korean companies will focus on PHVs, EVs, and FCVs, which will be subject to the regulations, and Japan and South Korean automakers will be on a level playing field. From a technical perspective, because Japan’s “Big Three” have access to leading-edge technologies in the areas of fuel efficiency and vehicle performance, South Korea is unlikely to overtake Japan in these areas. To make up for these disadvantages, how aggressive the South Korean automakers decide to be in the price war will be critical; however, if the present appreciation of the won continues, they will face an uphill battle.

2 Trends and Strategies in the Battery Industry

2.1 Integration of Japan’s battery and automobile industries

Now, let’s turn to the battery industry. Japan’s battery industry is characterized by an integrated business model as evidenced by its partnering with the automobile industry to establish joint venture companies. There are two major reasons for this, outlined below.

First, the automobile industry has a very detailed understanding of batteries themselves, as they are a key component of the automobile, and this industry is willing to involve itself directly in the development of batteries required for eco-car development. Their corporate culture dictates that they will never pass the entire responsibility onto battery manufacturers.

Second, recalls have a serious impact. Once a battery manufacturer recalls its product, the company is exposed to a significant risk to the viability of the company. Therefore, companies set up joint ventures to diversify risk.

A salient example is Primearth EV Energy (PEVE), a joint venture founded in 1996 by Toyota and Panasonic. The company has expanded through the manufacture of nickel-metal hydride batteries for EVs and HVs, and to date, it has strongly identified itself with Toyota.

As shown in Figure 1, in the summer of 2014, PEVE became one of the five partners to establish Corun Peve Automotive Battery, a manufacture of in-vehicle nickel-metal hydride battery modules located in Changshu, Jiangsu, China, in collaboration with Hunan Corun New Energy Co., Ltd., Changshu Xin Zhong Yuan Venture Capital Co., Ltd., Toyota Motor (China), and Toyota Tsusho Corporation. The establishment of a production base in China will lead to development and production with a sense of unity with Toyota, generating further competitive strength for the company.

Test Navi Report No. 18 (Vol. 82) 5 Batteries’ reliability

Figure 1. The battery industry's initiatives toward expansion in the Chinese market

Panasonic also maintains a development and production system linked with Toyota and manages its business by incorporating technologies developed by SANYO Electric, which the company acquired. On the industrial map, PEVE and Panasonic are on Toyota’s side, broadening that company’s development capacity.

While emphasizing its partnership with Toyota, Panasonic has also decided to build a plant in the U.S.A. to supply LIBs to Tesla Motors in the U.S.A. and plans to increase its investment in phases. As this plan will be directly affected by the market share growth of the Model S, Tesla’s EV and its successor model, the company is following a strategy to make phased investments while monitoring the situation.

Meanwhile, Honda’s strategy is to follow Toyota by shifting from the conventional mild HV (integrated motor assist, or IMA, system) to a strong HV. The HV system employing the two-motor method is boosting competition with Toyota in the area of fuel efficiency.

Test Navi Report No. 18 (Vol. 82) 6 Batteries’ reliability

Blue Energy Co. (BEC), a joint venture of Honda and GS Yuasa Corporation (GSY), has increased its presence by supplying LIBs for HVs and PHVs for Honda cars. Note that the Fit EV has been using Toshiba’s SCiB (Super Charge ion Battery), because BEC’s business model did not cover the manufacture of LIBs for EVs.

Honda’s strategy to procure LIBs from two suppliers — i.e., procuring LIBs from a supplier other than Blue Energy (BEC), its joint venture with GS Yuasa Corporation (GSY) — has been a challenge for the company since its new president, Takahiro Hachigo, had been in the procurement division. In 2010, when I was a member of Samsung SDI, I met Takanobu Ito and T. Hachigo, then-president and director, respectively, at a time the issue had emerged as a company concern.

Unfortunately, Samsung SDI failed to become the second supplier for Honda. It was Panasonic that Honda singled out as its second supplier. Eventually, cars equipped with Panasonic LIBs will appear on the market.

Similarly, Toshiba’s SCiB was passed over as the second supplier of batteries for use in HVs and PHVs of the future.

Nissan Motor procures pouch-type LIBs manufactured by Automotive Energy Supply (AESC), a joint venture with NEC, for use in EVs and HVs.

Mitsubishi Motors procures LIBs from Lithium Energy Japan (LEJ), its joint venture with GSY and Mitsubishi Corporation. Although GSY invested heavily in the domestic industry in expectation of growth in EVs, the utilization rate of LEJ’s products has been low due to sluggish growth in the EV market. However, as the Outlander PHV hit the market in 2013 gradually gained popularity, the utilization rate has been improving. GSY, meanwhile, appears to lack the resources to invest in China in step with the growth of eco-cars in the Chinese market.

Despite the magnitude of the main operations of Toshiba and the Hitachi Group with battery divisions, they are actually struggling in the area of in-vehicle batteries. Both companies are conducting market research; however, their products lack a competitive advantage that appeals to automakers around the world.

Test Navi Report No. 18 (Vol. 82) 7 Batteries’ reliability

2.2 Rise of South Korean manufacturers in competition with Japan’s battery industry The battery industry has recently made headlines. Lead-acid batteries, nickel -cadmium batteries, nickel-metal hydride batteries, and lithium-ion batteries have been Japan’s forte and this industry has a business model unrivalled in the country. Or, to be more accurate, “had.”

The invention of the LIB is largely attributable to the accomplishments of Dr. Akira Yoshino, a Fellow of Asahi Kasei Corporation. The focus of the industry in recent years has shifted to closer competition among manufacturers in Japan, South Korea, China, and the U.S.A.

In the meantime, European manufacturers completely lack visibility. Even Germany, which boasts industrial products as the source of its national strength, is worried about its fragile battery industry.

Until around 2005, the battery industry was a Japanese stronghold. Everyone involved in Japan’s battery industry must have believed it had a bright future. Looking back, Japan’s strengths were apparent from the perspective of battery-related technologies and business as well as energy-related technology management, a field I have been involved with.

However, when I try to analyze the present situation judiciously, I see dark clouds looming over the battery industry, one in which Japan has been holding an unchallenged position. The Japanese industry is now facing the rapid rise of the South Korean manufacturers, the enormous leap of Chinese manufacturers, new business models undertaken by venture businesses in the U.S.A., and others who have been working fiercely to catch up.

In particular, when looking at the rise of South Korean companies, mainly in the manufacturing of LIBs for mobile devices, the decline in Japan’s presence is undeniable. In this area, the South Koreans came from behind and won a larger share of the market. The trend was evidenced by a media report at the end of August indicating that a Panasonic plant for manufacturing mobile phone LIBs in Beijing would close in September 2015, and 1,300 employees would be laid off. Going forward, jockeying for the leading position would also be fierce in the fields of in-vehicle batteries and energy storage system (ESS).

Renault, which has a capital tie-up with Nissan Motor, has adopted pouch-type LIBs manufactured by South Korea’s LG Chem. Considering the fact that in the global arena, AESC and LG Chem are the two suppliers (except for Chinese local battery manufacturers) of

Test Navi Report No. 18 (Vol. 82) 8 Batteries’ reliability pouch-type LIBs and that a top official of Nissan said, “it may procure LIBs from outside as long as the performance is satisfactory,” I would think LG Chem is the largest competitor for AESC.

Furthermore, Renault has pursued technological development under its own initiative, rather than that of Nissan. In addition, because LG Chem’s LIBs have a track record of global adoption, I cannot ignore the possibility that Nissan will procure LIBs from LG Chem in addition to procuring them from AESC if its battery technology R&D and progress at LG Chem satisfy Nissan’s requirements.

With the evolution of the Renault-Nissan Alliance, AESC and LG Chem will be in close competition; however, Renault and Nissan have made arrangements to be supported by two battery manufacturers.

Samsung SDI has fallen behind its South Korean peer, LG Chem. True, Samsung supplies LIBs to BMW’s i3 EV and i8 PHV as well as Fiat Chrysler’s EV; however, it has been struggling to change the status quo and expand its business by supplying other leading automakers.

Samsung SDI is constructing a new LIB manufacturing plant in Xiang, China, which will start operating in the latter half of this year. For the time being, however, the LIBs manufactured at that plant will be supplied to local carmakers (Fig. 1).

2.3 Declining profile of Chinese battery industry

I have already discussed the current situation in Japan and South Korea; meanwhile, local battery manufacturers in China, home to the world’s largest car market, are facing a harsh reality.

In China, it is necessary to comply with GB standard, China’s safety standard for in-vehicle batteries. Originally, these standards were developed to stem the frequent car accidents caused by low-quality made-in-China batteries. Japanese and other carmakers have been striving to meet this standard.

In China, there is an active market for EV buses, which benefit from government subsidies. EV passenger vehicles receive subsidies of about 1.2 million yen at maximum; while EV buses receive subsidies ranging from 5 million to 10 million yen depending on the bus length. The EV subsidy program is expected to continue until 2020.

Test Navi Report No. 18 (Vol. 82) 9 Batteries’ reliability

BYD Company has the largest share of China’s EV bus market, and it also operates a battery division as an in-house manufacturing business. Other manufacturers of EV buses procure batteries from domestic vendors. A medium-size manufacturer, Shandong Electric Vehicle Co., that ranks the 10th or so in the market share for EV busses, started to procure some of its LIBs from Hong Kong-based ATL (Amperex Technology Limited); however, it is reported that the company is dissatisfied by the frequent incidents of deficient LIBs from this source.

The company is interested in LIBs made by Toshiba, Hitachi, and other Japanese manufacturers and finds added value in their safety and reliability despite the higher costs. Chinese EV bus manufacturer have taken interest in Toshiba’s SCiB (LIB), and Toshiba has already started to supply this product to the bus maker. The company has received inquiries from other companies as well, and has the potential to grow in this field.

ATL has developed its business in the field of LIBs for mobile devices and is expanding its business by supplying products to Apple, Inc. of the U.S.A. and others. In addition, the company commenced R&D of in-vehicle LIBs a year ago and has been considering starting up a full-fledged business. The battery R&D team has 700 employees with a master’s degree and 100 with a Ph.D.

The company is developing a square-can type product that differs from the mainstream Chinese pouch type due to safety and reliability concerns that have arisen regarding the pouch type. These concerns have resulted from the occurrence of pinholes in the pouch pack and the difficulty of releasing internal gasses and the like. The company has explained that the can type has advantages over the pouch type in terms of electrolyte injection.

It is true that Chinese battery manufacturers have not attained industry standards in terms of safety and reliability. There will be no tomorrow for these battery makers unless they clear some hurdles and meet the standards.

The challenge for Chinese battery manufacturers is their lack of safety technologies. EV buses made by BYD Company seem to garner frequent complaints in China. It is reported that the problems are attributable to the incompleteness of the LIBs. Concerns have arisen over the potential for malfunctions in the BYD EV buses ordered by Kyoto City.

If China introduces standards for safety evaluations, and Japanese and South Korean battery manufacturers expand their businesses into China, an increased number of local battery

Test Navi Report No. 18 (Vol. 82) 10 Batteries’ reliability makers in China will face a make-or-break issue. Safety and reliability have no boundaries, and a shift to safe and highly reliable products that do not cause accidents will be an issue of social justice.

2.4 Future challenges for the Japanese and South Korean battery industries

In light of the above, the challenge for Japanese battery manufacturers engaging in tie-ups with carmakers will be how to cope with challenges that arise with the respective automakers. On the other hand, for Toshiba, Hitachi, and other battery manufacturers adopting a policy of openness to survive, much strategizing will be required.

The key will be how aggressively they can edge their competitors in the global automobile market; however, the outlook is grim. In a situation where Japanese and South Korean battery manufacturers are in competition, relative dominance is elusive. Their options will be to use their financial strength to expand into the Chinese market and develop the EV bus business or to further shift focus from the business of in-vehicle batteries to energy storage systems.

Meanwhile, the two South Korean manufacturers face a different type of challenge. LG Chem’s future depends on its ability to engage in business with Nissan by levering its ties with Renault.

The company originally had business with General Motors (GM) and Ford Motor of the U.S.A., business in Europe, and business with Hyundai Motor; in addition, it constructed a plant in Nanjing, China to manufacture in-vehicle LIBs as a start-up business. Under these circumstances, collaboration with a Japanese automaker would have a great significance.

Samsung SDI has not generated any new business other than with BMW and Fiat Chrysler. The challenge for Samsung will be to forge its next partnership with a North American or European automaker, or to establish business alliances to become the second supplier needed in the Japanese automobile industry.

3 Analysis of Trends Apparent at the International AABC Conference１

In the middle of June, the 15th International AABC (Advanced Automotive Battery Conference) was held in Detroit, U.S.A. with more than 500 attendees. Many of the participants are regulars, and the conference serves as a forum for exchanges of information and opinions on a personal level outside of the official meetings. Test Navi Report No. 18 (Vol. 82) 11 Batteries’ reliability

When I attended the conference 2 years ago, I put forward a suggestion to Dr. M. Anderman, organizer of the international conference, that “at next year’s conference, it would be good to have a session on battery safety and safety evaluation, as LIB-related accidents have occurred in addition to problems in the market.”

The organizer seems to have taken this suggestion to heart, as this year’s program included a new session on “Battery Abuse — Tolerance and Validation.” As a result, the program included lectures from General Motors, Ford Motor, and Sandia National Laboratories of the U.S.A., as well as the Canadian branch of TÜV SÜD, an independent product-testing laboratory.

3.1 Presentations by Japanese manufacturers taking a lead in the conference

First, Toyota Motor has continued its involvement with the international conference as a top-ranked sponsor. A younger employee originally from Sony delivered their presentation, but a senior employee was also on hand to reflect a strong presence at the conference. Through its behavior, Toyota demonstrated is position of leadership in the automobile industry. It also showcased its Mirai FCV and provided explanations in its lecture.

During this lecture, Toyota provided an analysis of battery deterioration caused by actual driving based on data from HVs supplied to the market as well as battery observation, providing feedback on future development. Its report on this analysis backed by field data serves as a reference for the industry.

Honda’s presentation also provided drive data on the Fit EV, the EV it launched on the market, by breaking down parameters that affect deterioration of batteries into battery temperature, SOC (state of charge), and current, and analyzing the impacts. It happened to be a similar analysis of field data as Toyota, but it was very convincing. Such data can be reflected in how the company will develop batteries in the future and how it designs battery usage.

Toyota and Honda have such a rich store of data because they lead the global HV market. Since 2001, when the 1st AABC was held, through 2004, I was in charge of the lectures and chaired the session for the international conference as a member of Honda. From the very beginning, presentations by Japanese participants focused on technology backed by data, making them highly reliable and convincing.

Test Navi Report No. 18 (Vol. 82) 12 Batteries’ reliability

In the U.S.A., Ford has been taking a central role in actively promoting a safe testing method and evaluation testing method in the automobile industry with the involvement of the national laboratory.

As shown in Table 1, the ZEV regulation in California, U.S.A. scheduled to take effect in 2018 will be important for the European automobile industry. The regulation requires that 4.5% of all car sales be PHVs, EVs or FCVs. The regulation will apply to distributors whose sales per year in California are not less than 30,000 units and not more than 60,000. Partly as a result of this regulation, European carmakers have developed a strategy to strengthen their PHVs.

Table 1. Overall trends in the automobile industry significantly impact various industries.

ZEV regulations will be further tightened and the requirement for 2025 will be 22% of unit sales, triggering growth in the market for HVs and EVs. In addition, the mandate requires strengthened CAFE (corporate average fuel economy) standards; consequently, the market for HVs will expand as well.

Test Navi Report No. 18 (Vol. 82) 13 Batteries’ reliability

Against this industry trend, companies are actively developing Tier 1 businesses: Bosch of Germany (including its joint venture with GS Yuasa), Austria AVL, and Austria Magna Steyr (acquired by Samsung SDI) are among those who have been aggressively promoting such business development.

3.2 South Korean makers fall behind in staking their ground

Looking to South Korean manufacturers, Hyundai Motor has had little or no presence at the Conference. Their low profile seems to be attributable to the cultural or behavioral patterns of South Koreans and South Korean companies, which have a strong competitive consciousness. In other words, they might have determined that Japanese makers have taken an overwhelming lead in vehicle electrification, and Hyundai Motor would not be able to demonstrate a strong presence even if they were to make a belated entry into the field.

SK Innovation of South Korea participated in the previous conferences at various levels with an exhibition space, conference sponsorship, and lectures. However, the situation was totally different at the most recent conference. They cancelled all exhibitions and lectures and did not send any participants. The company seems to be making some changes to its policies and strategies. The company had developed a battery business but it may have been facing challenges, as its business has registered no growth or expansion with automakers.

The business model of the company is weaker than that of LG Chem or Samsung SDI, the other South Korean battery manufacturers, which might have an impact on its business. SK Innovation might sense that it is lagging its two peers, which may have an impact on company policy.

Meanwhile, Dr. S. Kim, Professor of Chungnam National University of Korea — and my direct subordinate during my tenure at Samsung SDI — is building a laboratory testing service as a joint venture at Chungnam University. He seems to be trying to establish collaboration with SK Innovation, and the development of this service deserves attention.

Table 2 shows South Korea’s initiatives regarding high-performance batteries. Since 2010, it has been pursuing a policy of strengthening its basic research sector as part of a government initiative.

Test Navi Report No. 18 (Vol. 82) 14 Batteries’ reliability

Table 2. South Korea’s initiatives regarding high-performance batteries

GM’s Chevrolet Volt incorporates LIBs manufactured by LG Chem. GM recognizes the durability of LG Chem’s batteries and has explained its plan to further drive the evolution of LG Chem’s LIBs for use in the next-generation vehicle model and greatly improve the vehicle’s performance.

BMW’s i3 EV employs Samsung SDI’s LIBs. BMW performs in-house packaging of Samsung SDI’s LIBs in order to complete the battery system. It is interesting to note that partly because of this, BMW describes its product with no reference to Samsung SDI, as if this battery technology was developed in-house.

Samsung SDI supplies batteries only for EVs and PHVs made by BMW and Fiat Chrysler and has been falling slightly behind LG Chem in the area of customer development.

Test Navi Report No. 18 (Vol. 82) 15 Batteries’ reliability

4 ESPEC’s Business Model Contributes to the Reliability of In-Vehicle Batteries.

4.1 Development of a high-value-added evaluation system and contribution to reliability

For the automobile, battery, and materials industries, it is critical to ensure the reliability and safety of in-vehicle batteries.2 ESPEC’s background support offers great value to those industries from a global perspective.

Figure 3 illustrates the competitive advantage of ESPEC products. Among other factors, our products demonstrate strengths in the areas of reliability and durability, low failure rate, and excellent service.

Figure 3. Map of competitiveness of evaluation test equipment

Test Navi Report No. 18 (Vol. 82) 16 Batteries’ reliability

4.2 Contributing to development efficiency with our laboratory testing service and certification business Companies in China as well as South Korea and Japan often encounter problems that cannot be resolved in-house. The present situation in particular, in which the scope of evaluation tests increases in a phased manner, places a heavy burden on these companies. Carmakers and battery makers have introduced a substantial amount of evaluation testing equipment; however, the shortage of equipment and systems continues.

In such a case, using an outside evaluation testing laboratory would be better than introducing more equipment into the company. ESPEC is on the leading edge of this industrial trend. As shown in Figure 4, ESPEC launched a laboratory testing service in November of 2013 with the opening of the Energy Device Environmental Testing Center in our offices in the city of Utsunomiya. With many pieces of industry-first testing equipment, the Center covers wide-range of evaluation tests and serves clients from a variety of industries.

Figure 4. Laboratory testing service and certification business initiative

Test Navi Report No. 18 (Vol. 82) 17