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Sony-Eveready, founded in February 1975 as a joint battery-manufacturing venture with US-based Union Carbide Corp., was growing steadily. The original agreement for Union Carbide to develop the batteries and for Sony to manufacture and market in Japan was very much in place (see Part II, Chapter 10).
In January 1984, Keizaburo Tozawa, who had played an instrumental role in negotiations with Union Carbide at the time of establishing the joint venture, became chairman of Sony-Eveready. Although he had worked so tirelessly to create the new joint venture, he was a complete amateur on the subject of batteries, so he began studying diligently. Sony's ultimate goal was to create a rechargeable battery.
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Keizaburo Tozawa, whose efforts led to the founding of Sony-Eveready |
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At the time, the biggest concern in Japan's dry cell battery industry was environmental mercury contamination caused by discarded batteries. Sony's yearning for a battery that could be reused again and again was growing stronger everyday. Tozawa and others at Sony-Eveready remembered that the engineers from Union Carbide had once noted  Lithium is a promising material for batteries. Indeed, lithium is a light metal and has high conductivity, making it well-suited as material for a rechargeable battery.
On the other hand, metallic lithium requires careful handling, as it explodes when in contact with water. At the time, only very small button-shaped lithium batteries were available, most of them classified as hazardous products. Battery manufacturers like Sanyo Industries and Matsushita Battery Industrial Co., were aggressively developing rechargeable batteries that used nickel. When it came to lithium batteries, however, manufacturers were very cautious and hesitant. Union Carbide was no exception. Despite repeated pleas from Sony to develop lithium batteries, Union Carbide dragged its feet. Sony was in a bind between its desire for a lithium rechargeable battery and the stipulations of the joint venture agreement. In the midst of this, Sony was dealt a surprise blow.
Just after Tozawa finished his New Year's speech to employees in 1986, he received a shocking telegram from Union Carbide. It stated, Union Carbide has announced its intention to sell all of its consumer goods businesses, including batteries. Union Carbide had made the move to cover heavy compensation payments in the aftermath of an explosion at one of its plants in India.
When Sony-Eveready first began operations, it was expected that the company would receive technical support from Union Carbide. If the telegram was true, Sony-Eveready would lose this technical support. Moreover, what would happen to Union Carbide's half of the shares of Sony-Eveready? Tozawa left for the US with Sony's legal staff in an attempt to stop Union Carbide from selling its business to a third party. Tozawa thought that he had to do his utmost to stop this.
The negotiations with Union Carbide lasted three days. Lawyers representing both sides were preset, and it looked as if negotiations would collapse or result in a lawsuit. Finally, both sides agreed to the following: Sony would buy Union Carbide's shares of Sony-Eveready and would no longer use the registered trademark of Eveready by continuing to pursue its battery business under a different brand (see Part II, Chapter 10).
In March 1986, Sony's battery business was reestablished under the Sony-Energytec Inc. banner. Ibuka teased Tozawa by saying, You've given yourselves an ambitious name. Are you aspiring to deal in atomic energy or something?
Tozawa decided to turn the crisis into an opportunity to develop original lithium rechargeable batteries. He became the project leader. Thus Sony's quest for the development, manufacture and sales of the lithium rechargeable battery was underway.
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