Japan to Shake Up Battery Supply Lines Over China Fears

Worried Japanese automakers have pledged to take a long hard look at their electric vehicle battery supply chains in a bid to reduce risks, sparked by China’s planned move to curb exports of graphite

China, the world’s largest producer and exporter of the key material used in electric vehicle (EV) batteries, will require export permits as of December 1 for some graphite products, a regulation that could create a fresh headache for automakers.

While the extent of the potential impact is still not clear, some auto executives said on the sidelines of the Japan Mobility Show they were looking carefully at the situation and hashing out some next steps.

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Subaru is already working with suppliers to limit its risks related to procuring materials for EV batteries, its chief executive Atsushi Osaki said.

“There are risks involved in every kind of material, not only graphite. We want to procure resources while considering various risk hedges,” Atsushi Osaki told reporters on the sidelines of the show, which opened to the press on Wednesday, a day ahead of its official start.

“We are working with suppliers to come up with measures to deal” with the risks, he said.

While the main use of graphite has been in the steel industry, it is also used in EV battery anodes, the negatively charged portion of the battery. China refines more than 90% of the world’s graphite into the material used in almost all EV battery anodes.

China’s move could escalate trade disputes globally and prompt other countries to prioritise research into alternative sources and materials, industry experts say.

“We are also doing a lot of research on battery strategy,” Mitsubishi Motors Chief Executive Takao Kato told reporters when asked about graphite, although he declined to give specifics.

Sony, Honda Battery Team-Up

Mitsubishi is the junior partner in an auto alliance with Nissan and France’s Renault.

“Teaming up with Renault and Nissan as alliance members to do procurement together is one very attractive option,” Kato said.

Sony and Honda’s automotive joint venture could procure batteries for its new Afeela EV from the United States where Honda is building a factory, the president of Sony Honda Mobility, Izumi Kawanishi, told Reuters.

Japanese Prime Minister Fumio Kishida is due to visit the mobility show on Thursday, where he is expected to speak with auto executives, including on supply chain issues.

The show comes at a critical moment for the domestic industry. Toyota, the world’s top-selling automaker, this year announced a strategic pivot to battery EVs, including plans to commercialise advanced batteries and adopt die-casting technology pioneered by Tesla.

Toyota’s shift has helped silence criticism that it was too slow to embrace battery EVs. But the outlook is gloomier for some of its smaller rivals.

• Reuters with additional editing by Sean O’Meara

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