We sat down with Mr. Hiroichi Yoshida, Chairman and founding member of power storage specialist ELIIY Power to discuss his second career as a pioneer of large type lithium ion batteries for Japan’s EV and power sector. Topics covered include Mr. Yoshida’s professional background, ELIIY Power’s work with major Japanese power companies, and their efforts to commercialize a next generation battery with a nonflammable electrolyte.
Could you give us a rundown of your background and how you first became involved in Lithium-ion batteries and EV’s?
After graduating from university, I started my career at Sumitomo Bank (currently Sumitomo Mitsui Banking Corporation), where I worked for 35 years until becoming Deputy President. I was originally a banker.
When I was the president of a leasing company, I faced a problem of disposing of products whose lease period had expired. There are not enough places to dispose of those products in Japan due to a small land area. I thought that if the situation of our visible environment was so poor, that of invisible, such as atmosphere, must be terrible. Then I found the number of petrol cars had been increasing in the world including developing countries and learned more about the serious air pollution those vehicles create. I feared it might be impossible to live in the coming decades.
Therefore, I decided to spend the rest of my life contributing to this field.
Around that time, I coincidentally encountered an electric car designed by our vice president, Mr. Kawakami, in a project being promoted by a professor of Keio University, and realized, "This is it!" At that time, construction of nuclear power plants was planned around Japan. Since surplus electricity was generated at night, I thought that we could reduce CO2 emissions by storing excess electricity and using it as a power source for the electric vehicles which were becoming more widespread.
I was about 65 years old at this point, just around the age of retirement, but that's when this journey began for me. While supporting the project, I became the general manager of this project and was invited as a professor by Keio University.
And then I became the owner of the "Eliica Project". My role there was to use my sales experience as a banker to procure the necessary funds and assistance to run the project. In the end, I succeeded in obtaining assistance from more than 30 companies and a total 500 million yen fund, and finally completed building the prototype electric vehicle "Eliica" in 2004.
I wanted to demonstrate the speed of this newly made EV, Eliica, and let the world know the potential of electric vehicles. We did a test run of the car on a test track in Italy and it was able to run at a speed above 370 kilometers per hour. However, the thing that I learned from this project was the fact that a mass production system of large capacity lithium-ion batteries was not in place and its price was very expensive. Just running the car costed around 20 million yen. I also realized that such batteries had safety issues.
Therefore, I wondered if it would be possible to develop a battery that could be used for both energy storage systems and EVs and launched the “L-Square” project in which automobiles, general contractors, and housing manufacturers participated. I thought that if we could develop and mass-produce a large capacity and safe battery, it would become widely used.
What's really interesting is that despite the launch of the Eliica project, the L2 project, and our other exciting activities in the field of EV, the automotive industry didn’t show interest as expected. They were not willing to progress the EV business as it represented such a huge threat to the market, especially considering that the internal combustion engines utilize so many different components and rely on so many different suppliers that make up the automotive industry. They kept their distance from us.
Under such circumstances, Mitsubishi Motors, which was the only automobile manufacturer who participated in our project and realized the potential of electric vehicles, withdrew from the project in 2003. Subsequently, the world's first mass-produced electric vehicle, the i-MiEV, was developed and mass production began. It could be said that Japan's initiative in the EV field started with the L2 project.
We invited many VIPs, including the Crown Prince and Princess (currently the Emperor and Empress) and former Prime Minister Koizumi, and demonstrated the necessity of EV by riding in the Eliica. However, at that time, lithium-ion batteries were only small batteries such as the 18650. It was also the time when the number of fire accidents and recalls of lithium-ion battery were increasing, therefore no manufacturer was willing to take on the risk of mass-producing large lithium-ion batteries.
Yet I knew intuitively that lithium-ion batteries would play a central role in future to energy management. If no one would do it, I thought we should make a large lithium-ion battery that we would need in the future and help the world, so we started the company with Mr. Kawakami and others. At that time, I was 69 years old.
We started the company with four people, however none of us had a background in electrochemistry. This example shows that at a technology-oriented company, you don't always need to have the experts in related fields among your foundational team in order for a company to succeed.
Meanwhile, Elon Musk, who was developing an electric vehicle at the same time, developed and mass-produced a price-competitive EV using the 18650 batteries, which was relatively inexpensive since it was overproduced in the market. I am amazed at his business talent. On the other hand, we maintain the policy of starting mass production of our batteries after obtaining sufficient confirmations that prove it is safe before it is widely used. Many companies, not only EVs manufacturers, have the idea that the safety of electricity storage products is ensured not by the battery itself but by the control system. On the other hand, we put the highest priority to secure the safety of the battery cell itself when we develop and manufacture them on the premise that it cannot be controlled by the system in the event of an unexpected situation such as an earthquake or collision accident. Our priority is different from that of other companies.
I believe that priorities matter in everything. We have been consistently developing and manufacturing lithium-ion batteries since our establishment with the priority of safety first, performance second, and price third. My belief is that batteries used in homes and buildings can only be used if they are absolutely safe. As batteries for power storage contain a large amount of energy, both those who need long-term care such as children and the elderly, and healthy people cannot notice the abnormality and escape when sleeping at night. You can't afford to neglect safety at all.
In establishing the company, since it was an equipment industry, it required a lot of money and I thought it would take time. I visited not individuals but the around 300 companies and insisted on the importance of the battery and successfully raised business funds about 38 billion yen.
I took up the challenge of a field that nobody in the world had yet started, which was to create these absolutely non-flammable large capacity lithium-ion batteries. No company was willing to take the risk, but I went for it. We made use of this very interesting material called lithium iron phosphate for a large capacity lithium-ion battery, a world first, which nobody even valued at the time. On top of that, I was able to achieve a fully automated assembly line for the manufacturing of this product at a time when it was extremely challenging for anybody to fully automate manufacturing lines.
I was stationed in the UK the year I became Executive Director of the Bank at the age of 52. Until then, I was trying to behave similarly as the people around me. However, the people I had a relationship with when I was living overseas showed me a different presence from other people. They seemed to praise each other's presence and the good points of those who live differently from themselves, and create new things eventually. On the other hand, in Japan, I think there is a tendency to look for other people's points to be improved. We are good at fixing the points that need to be improved. Therefore, I think Japanese tend to follow good examples and try to be as similar as possible. It's not only bad things, but the Japanese people have an earnest national character, and I think that the wonderful philosophy of "Kaizen" was born from that spirit. However, through my experience in the UK, I started to realize the necessity of doing something different to help the others, society, and the world.
I created this new market from scratch just from our business and enabled the remote monitoring system to be installed in our batteries. Our batteries last for 20 years, but we've installed a kind of timer that automatically makes them stop after 10 years for inspection. We were confident in the safety of the battery, but reliability requires the accumulation of data. All of that was for the purpose of safety, and making that the major priority, and for that reason none of our batteries have resulted in any accidents. We've achieved zero fatal failures, and moreover, most of the internal batteries can still use more than 80% of their original capacity, therefore I think that a lifespan of 20 years can be reached. I think this is a breakthrough for lithium-ion batteries for power storage.
The Japanese government has been unwilling until very recently to incentivize or subsidize research into new battery technologies, quite unlike their counterparts in China or South Korea. Can you tell us where you believe the competitiveness of Japanese industry lies today? How do you differentiate yourselves from your Chinese or Korean competitors?
After World War II Japan’s industrial structure once completed, and cannot be changed easily. On the other hand, China has also launched a new equipment industry like Japan did after the war. In particular, as EV's main components are only batteries and motors, and it does not require a wealth of mass production experience or technical wisdom like engine design, China could be a game changer in the automobile industry.
The EV market is growing rapidly on a global scale right now. However, if the source of electricity to power EVs is thermal power generation using fossil fuels, the more electricity is generated, the more CO2 is emitted, which is a complete reversal of the original intention. Also, due to today's global situation and various reasons, Japan and other countries around the world are experiencing a series of electricity shortages and soaring power costs, and I am concerned that the focus on the spread of EVs will lead to more power issues developing. Firstly, we should make good use of storage batteries to maximize the use of renewable energy, and then introduce clean EVs that use clean and stable electricity even if it may slow down their widespread adoption. In this way, I believe that the discussion should not be focused solely on EVs but should be combined with large capacity lithium-ion batteries.
In this fast-changing EV and Lithium-ion battery industry, I am sure that Japanese companies are in a difficult situation, but I believe that the number of people who want to create new things different from others is increasing with the cooperation of people from diverse backgrounds, diverse ages, and with different strengths, Japanese companies will surely win the number one position in the world again.
Can you tell us more about your work with virtual power plants and the decentralized energy model? How do you anticipate or believe that new digital technologies will impact the energy sector going forward?
VPP will reduce energy costs and reduce power plant investment and maintenance costs by adjusting supply and demand with distributed storage batteries instead of peak power sources such as pumped-storage hydropower and oil-fired power generation, which are responsible for adjusting electricity demand. The storage battery installed in a house can contribute to the suppression of demand by contributing to the self-consumption of the household's electric power, and the storage battery can also be used for supply and demand adjustment, so it can play a role as a VPP.
The reason why we were able to work on VPP together with major electric power companies such as Kansai Electric Power Company and Tokyo Electric Power Company is that our power storage system can already control the charging and discharging of storage batteries using a remote monitoring function. The electric power company does not need to issue a charge / discharge command to each electric power storage system, instead our server controls the electric power storage system just by instructing our server to adjust the supply and demand, so the burden on the electric power company can be reduced. In addition, about 60,000 of our units were installed in Daiwa House's houses all over Japan, so I think it was an attractive environment for verification tests.
You've been sending many of these kinds of unit overseas, but are they compatible with foreign energy systems and standards as well, or are they just intended for the Japanese market?
Voltage varies from country to country, so in order to use our products in other countries, a transformer may need to be installed. Nonetheless, our products have been adopted for use in the residences of Japanese embassy staff in Micronesia and Botswana because of their high level of safety, and they continue to be used today. We have also exported more than 16,000 battery modules to residences in Australia from 2013 to 2017. I believe that the future of the energy industry, both domestically and internationally, lies in this decentralized energy model, where electricity from solar power installed in homes is provided through local production for local consumption, and the energy generated can be fully charged and stored.
What role does collaboration play in your business model? Are you currently looking for partners either in Japan or overseas?
Collaboration and working together with different companies has definitely been an important part of our work here. We've rolled out a number of different types of collaborative partnerships with different companies. Since our batteries are so safe, even if they're expensive, the safety standards are top notch and that is one of the reasons why many companies are open to work with us and want to work with us.
I believe we're just at the beginning with regards to co-creation, and there's much more room now for us to really spread our wings and soar when it comes to the number of partnerships and the number of ways in which our batteries can be applied to different industries through cooperative agreements.
We put safety first in our storage batteries and confirm that they can be used safely until the end of their service life. However, although the risk of fire for general lithium-ion batteries is lower for a shorter period of use, care must be taken as it increases towards the end of service life. That's why it's very important, once again, to make sure that you don't mess up your priorities and the order in which you do things. Safety must be number one in terms of the growth and development of this market.
As someone who's been involved in the EV sector in Japan since its foundation, what are your thoughts on the Japanese government finally embracing the development of EV technologies in Japan?
I don't know how the funds are going to be dispersed and whether they’re going to be applied to the model of power supply that we’re championing. I believe that that kind of government assistance is directed towards the automotive sector and companies involved in cars. Rather than focusing solely on EVs, I believe that discussions should be held from a multifaceted perspective, including large capacity lithium-ion batteries and renewable energy.
Can you please share with us how you plan to develop your international business?
In the case of direct exports and things like that, that is not something that we have done. There have been calls for technical training and that kind of assistance and support from abroad, especially since our products are also able to gather and process large amounts of data which can show and prove the degree and nature of their usage.
However, due to the lack of human resources at the moment, we haven't necessarily been able to consider dispatching any of our personnel to do such training abroad. Right now we have our hands full with the domestic market and domestic demands, so we don't have any direct plans for internationalization per se. We don't have a clear strategy in that regard yet, but that is something for the future and as we grow, it will become key.
Our batteries have reached a level now where their energy storage capacity could power a variety of industries as they meet such high fire standards as well. That is actually something really exciting, and we've also developed a number of different backup power supplies and services.
Recently, although all solid-state batteries have been called a promising next-generation battery, we are developing a battery with a nonflammable electrolyte. I believe this battery can change the world. I believe our new battery will be on the market faster than all-solid-state batteries. Our batteries will continue to evolve. We want to contribute to society by being different from the way the world works.
Let's say we come back to interview you again in four years' time for your company’s 20th anniversary. What would you like to tell us about your goals and dreams for the company in that timeframe?
Safety will continue to be our top priority in the next generation, and we would like to further develop this battery and make it more affordable.
However, in pursuing cost reductions we should never forget that safety is the most important factor, and they should strive towards creating the world’s greatest functional battery, affordable and accessible to all.
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