Battery Industry: Does it pay to invest in batteries? Message Board

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Gold/Mining/Energy : Battery Industry: Does it pay to invest in batteries?

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To: Jacob Snyder who wrote (13)	1/17/2009 1:57:11 PM
From: Sam Citron	of 18

Most people occasionally want to take long trips, and can't afford to have separate cars for commuting and vacationing. Most American families own more than one car. Those who do so and live in more temperate climates might find, as we do, that their needs may be served quite well by having a NEV [neighborhood electric vehicle] as a "second car". In spite of Toyota's 60% interest in their JV with Panasonic to produce batteries for EVs, I would not categorize TM as a battery company. The JV is simply an expedient structure right now to try to adapt Panasonic's battery technology to Toyota's automotive platform. Unlike cars, batteries are designed by chemists. Toyota's strength is in quality control and low-cost advanced manufacturing systems. Although theoretically such systems might be adapted to the manufacture of virtually anything, including batteries, and vertical integration is always a possibility, it will be very difficult for Toyota to dominate to the extent that it is more efficient to make their own batteries than to buy them from an outside company that specializes in making batteries. A big problem that Toyota will face with their Panasonic JV will be the conflicts inherent in selling batteries to its competitors. GM has also expressed their desire to manufacture their own batteries. Car manufacturers' interest in making auto batteries is simply a temporary manifestation of their desire to control costs and of the immature and dynamic nature of today's battery industry in relation to the traditional auto business. Eventually battery technology will reach a more mature phase, batteries will be cheap commodities once again, and Toyota will no more want to be in the auto battery business than it will want to be in the tire business. In the meantime, the selling of any product that is typically bought on credit will be a challenge, especially high-priced new cars. It was one thing to fork over $25,000 on a new Prius when gasoline was over $4 per gallon and the stock market was still sizzling. It is quite another to do so when gas is once again under $2 and the economy is very weak. Until it becomes clear to policy makers that the most expedient policy option is to inflate their way out of the debt problem and oil prices climb back over $100/bbl, I doubt that battery technology will be worth investing in either for the average investor. Better simply to invest in Autozone [AZO] as the typical American tries to keep his old clunker going as long as he can. Sam

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