VW, Varta Microbattery Form Research JV

Alliance is part of effort by European carmakers to catch up in electric car battery development.

Published: 30-Sep-2009

Volkswagen AG has hooked up with Varta Microbattery GmbH to accelerate the German auto industry's push into next-generation vehicle battery production. The companies have launched a research joint venture to produce batteries for electric cars.

The venture is part of a broader effort by German industry -- with a nearly $30 million assist from the German government -- to catch up with more advanced green-battery production efforts in the U.S. and Asia. Volkswagen has existing hybrid vehicle partnerships with Sanyo Electric Co. and Toshiba Corp., but the European auto industry on balance is playing catch-up with the other developed markets.

In the U.S., Johnson Controls Inc. (NYSE:JCI) and A123Systems Inc. (NASDAQ:AONE), which raised $378 million in a Sept. 24 initial public offering, are leaders in lithium-ion battery development. Interestingly, Johnson Controls entry into hybrid battery production can be traced back to the 2002, $320 million acquisition of Varta Automotive GmbH. The prize at the time was Varta's lead-acid battery business. By 2005, however, Johnson was leveraging Varta's green-battery technology in a range of manufacturing partnerships, including its JV with Saft Group SA of Paris.

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The joint ohnson Controls-Saft venture will manufacture the lithium on batteries at their factory in Nersac, France.

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