- Johnson Controls' AGM batteries, which power start-stop
vehicles, increased its market penetration in the U.S. with the
addition of Chevrolet's 2014 Malibu.
- The company is also investing in its global AGM production
capacity to take advantage of the rapid rise in demand for
batteries that can power start-stop vehicles.
Johnson Controls (
) announced recently that Chevrolet's 2014 Malibu featuring
start-stop technology will be powered by its Absorbent Glass Mat (
) batteries. With this deal, the largest auto battery manufacturer
in the world has increased the penetration of its start-stop
technology in the important U.S. market. Earlier in the year,
Johnson Controls announced that Ford's (
) 2013 Fusion auto in the U.S. featuring start-stop technology will
also be powered by its AGM batteries.
Start-stop technology saves around 5% on fuel consumption by
switching-off the engine when the vehicle comes to a halt at
traffic lights or elsewhere. The engine restarts as soon as
the driver's foot comes off the brake or engages the clutch. During
the halt, Johnson Controls' AGM batteries power the vehicle
air-conditioning, music and other utilities. Their key feature
being that they can power the deep cycling that is needed for
frequent engine starts and stops. Apart from savings on fuel, this
technology also reduces vehicle emissions considerably.
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, marginally below its current market price.
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Stricter Emission Norms Is Driving Adoption Of Start-Stop
As start-stop technology is a cost-effective way of reducing
vehicle emissions, it was first adopted in Europe driven by the
region's strong focus on cutting emissions. Though overtime
customers in Europe increasingly adopted this technology as the
price premium paid for start-stop technology was offset by fuel
savings realized during the vehicle's life time. According to a
recent study commissioned by Johnson Controls, around 91% of
start-stop vehicle owners in Europe said that they would like to
purchase such a vehicle again.
The company estimates that nearly 80% of all new cars that will
be built in Europe by 2018 will feature start-stop
technology. This means a huge and growing market for Johnson
Controls' AGM batteries exists in Europe. Accordingly, the company
is investing in its production capacity in the continent to capture
a large share of this market. Currently, Johnson Controls produces
4.5 million AGM batteries annually in Europe, but by 2015 it
anticipates to raise its annual production output of AGM batteries
in the continent to 11 million. Since 2001, Johnson Controls has
sold over 21 million AGM batteries in Europe.
Start-Stop Technology Beginning To Gain Foothold In The
In the U.S., with emission norms becoming stricter, start-stop
technology is gaining interest among vehicle manufacturers. The
U.S. Corporate Average Fuel Economy (
) standards require vehicle fleets to meet fuel efficiency
standards of 35.5 miles per gallon by 2016 and 54.5 miles per
gallon by 2025. Accordingly, vehicle manufacturers are looking
at ways to increase fuel efficiency and reduce emission levels of
their vehicles. A current alternative to start-stop technology
in front of car manufacturers for meeting the tougher emission
norms is hybrid vehicles, however, the much higher price premium
asked of customers in the case of hybrids makes start-stop vehicles
an attractive option.
Catching on this growing adoption of start-stop technology in
the U.S., Johnson Controls introduced its AGM batteries in the
country in July last year and is currently expanding its annual AGM
battery production capacity in the country to 6 million
units. The company estimates that by 2016 nearly 40% of all
new cars that will be built in the U.S. could feature start-stop
technology requiring AGM batteries. Thus, like in Europe, there is
a large market opportunity for Johnson Controls' AGM batteries in
the U.S. However, the company competes with many auto battery
manufacturers including Exide, GS Yuasa among others for a share of
this advanced battery market that can power start-stop vehicles.
The addition of Chevy's Malibu to Johnson Controls' list
of customers will strengthen its position in this evolving
start-stop batteries market in the U.S..
Apart from the U.S. and Europe, the company is also investing in
China to raise its AGM production capacity in that country to 2
million units by 2015. Overall, these investments in all key
global vehicle markets will make sure that Johnson Controls retains
its position as the largest auto battery manufacturer in the world,
even as the market shifts from conventional lead-acid to advanced
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