The latest grid storage player: Japan’s NEC

In yet another sign of how much the once dominant Japanese consumer electronics conglomerates have shifted in their strategy, NEC announced that it was buying the battery grid storage unit from A123 Systems, which is itself owned by China based Wanxiang group. A2123 Systems will retain its electric vehicle battery business.

NEC, along with other Japanese electronics makers, are in the process of shifting strategy away from consumer electronics, where they’ve been beat up by Korean manufacturers like Samsung as well as Apple. Instead, NEC will head into the industrial technology sector as it tries to sell grid battery storage technology to North American and European utilities. Japan is itself undergoing a transformation in its utility sector as it ramps up its solar sector, becoming an instant major market for solar development. All of that solar will require grid storage as the country wrestles with the question of ever turning back on its multitude of nuclear reactors.

I was somewhat surprised to see Wanxiang divest so quickly of its grid storage business, though it was clear NEC had wanted to buy the grid storage business during the bankruptcy process. This leaves Wanxiang to focus A123 Systems on EV batteries, a relatively short history with lots of problems, including the Fisker debacle. I do wonder whether Wanxiang is expecting EV sales to ramp in China and optimistic that it could find customers domestically. Wanxiang paid $257 million for A123 Systems and will net about a $100 million from the sale to NEC.