GS Yuasa (6674) Upside from ESS and data center batteries; raising price objective, reiterate Buy

Research evidence excerpt

GS Yuasa (6674) Upside from ESS and data center batteries; raising price objective, reiterate Buy

Focus on the outlook for the Moriyama plant under BEV slowdown

Meanwhile, Blue Energy, a joint venture with Honda (51% stake for the company, 49%

for Honda), has been developing a lithium-ion battery plant for BEVs (Battery Electric

Vehicles) in Moriyama City, Shiga Prefecture. The project, with a total investment of

¥434.1 billion and up to ¥158.7 billion in government subsidies, targets annual

production capacity of 20GWh. However, Honda has recently announced a significant

strategic shift in its BEV business, and while construction of the Moriyama plant has

been completed, battery production has yet to commence, with discussions between the

two companies ongoing regarding its future.

In North America, Ford and Honda have announced plans to repurpose BEV battery

plants for ESS applications, while in Japan, Panasonic has indicated a strategy to shift its

Osaka automotive battery plant toward supplying data centers in North America.

Although similar repurposing of the Moriyama plant is drawing attention, we believe

such a transition may not be straightforward, given (1) the plant’s capacity appears

excessive relative to our estimated domestic ESS market size of approximately 5GWh by

2030, and (2) even if exported to North America, batteries produced using facilities

designed for ternary‑chemistry cells are likely to be less cost‑competitive than products

from peers that are increasingly adopted for data center applications.

At this stage, visibility on potential earnings contribution from the Moriyama plant

remains limited; however, depending on the outcome of discussions, options could

include (1) transferring the asset to an OEM (Original Equipment Manufacturer), as