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.
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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