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Daimler Weighs Sale of E-Car Battery Venture

German auto maker Daimler AG DAI.XE +0.50% and specialty chemicals maker Evonik Industries AG EVK.XE +0.09% are considering a sale of their unprofitable battery joint venture Li-Tec Battery GmbH, in a transaction owners hope could fetch as much as €1 billion ($1.32 billion).

Daimler, which owns 49.9% of Li-Tec and Evonik, which holds the rest, are weighing a sale of the Dresden-based company after efforts to get a third owner on board haven’t succeeded so far, and expectations of a electric-car boom have faded, people familiar with the matter said. Industry sources suggest the joint venture could be a good fit for Asian battery specialists.

Separately, Exide Technologies Inc., XIDE -0.54% a U.S. maker of lead-acid batteries that has supplied BMW AG, BMW.XE +0.40% Fiat SpA F.MI -4.67% and Nissan Motor Co., 7201.TO +2.33% filed for protection from creditors in U.S. Bankruptcy Court in Wilmington, Del. It listed assets of about $1.9 billion and debts of $1.1 billion in its Chapter 11 petition.

Daimler and Evonik hope another owner may find it easier to sell their joint-venture’s output to more car makers than just Daimler, which uses the venture’s lithium-ion batteries in an electric version of its Smart car.

“We are looking at different options to give Li-Tec a better long-term grounding in the very competitive global market for battery cells. We haven’t made a final decision,” Daimler said in a statement. Evonik confirmed the pair are considering options.

Amid great fanfare in 2008, Daimler began a strategic partnership with Evonik to develop electronic car batteries, hailing it as “the entry into a billion-euro market” and proclaiming the goal to become the “number one in lithium-ion battery technology in Europe.”

The companies started two joint ventures. One was to produce lithium-ion cells, dubbed Li-Tec, with Daimler taking a 49.9% stake and Evonik the rest. The other, Deutsche Accumotive GmbH, was to develop and produce battery systems for cars, with Daimler holding 90% and Evonik taking a 10% stake.

According to the plan, if Li-Tec achieved a breakthrough, the company was to sell the batteries to other car makers as well. But Li-Tec has been in the red since its inception. In 2011, the company posted a loss of €26.2 million, two-thirds wider than in the year prior. Li-Tec has said it expects operating losses for 2012 and 2013. Bankers expect any sale of the joint venture to fetch less than the owners’ €1 billion price goal.
More wsj.com

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