Everything was going well for the Swiss watchmaker The Swatch Group (VTX:UHR). Then Nick Hayek, the Chef Executive, announced that he wants to take the business to a new direction, and said they would be launching batteries for electric cars soon. Apparently, the company wants to achieve sales of $10-15 billion by 2020.
However, the investors are far from comfortable with Nick’s proposals. They are saying that the move is unnecessary, risky, unrealistic and expensive. It’s also not a focus area of the business. This year, the sales of Swatch are likely to be below the $8.36 billion of last year, and the company’s inventory is growing. Nick has also refused to announce savings that will go beyond the everyday efficiency efforts.
The Swatch Car Battery
According to reports, a battery has already been developed together with the Swiss Federal Institute of Technology in Zurich, and Belenos Clean Power, a company where the Group has 51 percent stake. Currently, prototypes are being produced at the Renata battery unit of Swatch near Basel. However, they are yet to be presented to the investors.
The fact is that it takes a long time to develop batteries because of strict safety tests. Batteries have come under the scanner even more, particularly after the Samsung Galaxy Note 7 explosions that were likely caused by overheating batteries.
It was also revealed that engineers at Swatch have been working on battery technology silently for many years. Now they believe they have developed new batteries than the standard lithium ion products, which power every electric car or plug-in device. Swatch says their batteries have shorter recharging times, higher energy density, better safety profile, and a longer life span.
Strong Demand for Car Batteries in the Future
The market for car batteries is likely to grow fast, though, because according to many studies, two-thirds of all cars by 2030 will be electric vehicles or EVs. However, the competition is also likely to be extremely strong. Heavyweight businesses such as Panasonic (TYO:6752) and Tesla are investing billions to bring down production cost and achieve scales.
To compete, The Swatch Group (VTX:UHR) also has to put in a lot of money. For that, it has to win the confidence of their investors, which is currently lacking.
One investor says, “There is little information on the Swatch battery. Hayek is known for giving fancy forecasts”. Another person says, “The timetable seems unrealistic. It is impossible to get from zero to 10 billion sales within just three years”.