Sanyo’s Future: Hybrid-Auto Battery Systems (SANYY)

07/30/2006

In a press release Sanyo Electric (SANYY) announced that it has reached an agreement to jointly develop next generation Nickel Metal Hydride (Ni-MH) battery systems for use in hybrid (gasoline-electric) automobiles with Volkswagen (VLKAY.pk). Sanyo cited concerns about the environment and rising gas prices as the key reasons for it to pursue the agreement with VW. The Nikkei Shimbun reported that amidst its restructuring Sanyo intends to make its battery business one of its core profit drivers. I like the direction Sanyo is heading as it moves away from consumer electronics and appliances and focuses instead more on high-growth industries such as batteries and solar panels.

Sanyo will provide the technology and know-how in developing the high-power, light-weight nickel-hydrogen batteries. No details were available regarding the expected volume of batteries to be supplied or when to expect the actual supplying to begin.

Since 2004 Sanyo has supplied battery systems to Ford (F) for the Escape model and to Honda (HMC) for the Accord at a volume of about 20,000 to each.