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Energy for a greener future

Interview - July 13, 2023

Since its foundation in 2009, SoftEnergy Controls has strived to provide top quality equipment related to battery production and EV infrastructure.

YUJI EGUCHI, CEO OF SOFTENERGY CONTROLS INC.
YUJI EGUCHI | CEO OF SOFTENERGY CONTROLS INC.

Japanese monozukuri is traditionally about product perfection to the very extreme attention to detail, and the concept of kaizen has become famous worldwide. Today, however, it is about responding to market demands, where quality, cost, and delivery (QCD) are essential to successful business on the world stage. Your business is revolved around environmentally-friendly energy solutions. Could you give us your take on monozukuri, and how it gives you an advantage as you operate internationally?

The Japanese have traditionally held the belief that high-performance and high-quality products warrant a high price point, which is one of the reasons why Japanese Monozukuri has been in decline for some time. In response to global market demands for quality, cost, and delivery (QCD), we have directed our efforts toward developing power supplies that utilize bi-directional inverters and converters, which are key components of our charge/discharge equipment. By completing the entire process, from development to manufacturing, in-house, including our subsidiary companies, we have been able to save a significant amount of time and cost. Our commitment to solid operational rules, coupled with an IT-based internal approval system, has enhanced our time efficiency and enabled swift decision-making as a company. We endeavor not only to meet the demands of our customers but also to contribute to society as a leading company in this industry by showcasing our technological advancements and creativity.


Some say that the Japanese monozukuri is under threat because of the population change we are seeing take place. Japan has 29% of its population over the age of 65 and has one of the world's lowest fertility rates,  impacting business in two ways. First, the domestic market is shrinking, where there are fewer consumers to sell products to. Secondly, recruiting talented engineers and salespeople is becoming ever more difficult. How is your business reacting to these population changes?

The declining birthrate and aging population have created a direct link to the shortage of manpower, presenting us with one of our biggest challenges since the establishment of our company. However, this shortage has also created a need for automated equipment in production facilities, which we have fully embraced with our expertise in automation. We are confident in our abilities to meet this challenge and offer a fully automated system. While the production industry used to rely heavily on meticulous techniques that could only be performed by highly skilled engineers, the rise of automation has changed this perspective. Customers now view each process in the production line as merely a part of the big systems that should no longer require a detail-oriented mentality. As we continue to adapt to this global change, we remain committed to developing detail-oriented, safe, and stable equipment that can be easily operated even by non-skilled workers in production facilities.

 

Japan has been very slow to adopt EV-based technologies. In January this year, the government announced that it is going to ease regulations on fast-charging EV stations. One of the biggest roadblocks was the cost. These stations cost tens of millions because of the regulations in place and strict fire safety measures. What is your take on this easing of regulations?

The greatest factor for the delay in Japan has been the lack of support from the government such as providing subsidies to enable us to enhance and speed up EV infrastructure including various charging stations as well as charge-discharge inspection equipment. Europe and China are heavily reliant on subsidies to roll out that infrastructure. On the contrary, Japan has just started to support it.

 

You are an engineering-oriented firm supplying environmental energy-based solutions, including charge-discharge inspection equipment, power supply equipment, and sensors. As we transition to carbon neutrality, SMEs are playing a critical role more than ever in this. How is your firm helping Japan and technologies involved in efficient energy-based solutions?

We also have a power supply that can regenerate the energy, from discharge to charge, which is a great deal in our process as it enables our customers to minimize energy loss from the factory.

The charging and discharging process is a vital step in the production line of secondary batteries, consuming a considerable amount of electrical energy compared to other processes. Our power supplies offer a distinct advantage in their high regenerative efficiency, resulting in less energy consumption and making a significant contribution to addressing the energy problem. We take pride in our ability to provide our customers with in-house designed power supplies, which we believe few competitors can match in terms of high regeneration rates. As a result, we have established ourselves as a trusted supplier for many customers.



Studies show that if we do not get the right power management for EVs correct, it could be a big environmental burden. To resolve this, first, we can feed back into the grid via vehicles. Secondly, we can have controlled energy use to avoid taking power from the grid at peak times. Your bidirectional technology is going to be key for this kind of technology moving forward, such as the ability to control when a car charges via the internet and not use power at peak times as cars sit idle 95% of the time. Can you explain how bidirectional technology can enable a smarter grid system?

The performance of secondary batteries depends on their capacity, which varies based on the ambient temperature. Therefore, in order to obtain accurate measurements of capacity, it is imperative to minimize equipment-generated heat. Increased heat generation results in less accurate measurements. Electric vehicle (EV) batteries, which require a substantial amount of energy, necessitate a significant investment in air conditioning to maintain uniform battery temperatures. Since all production machines generate heat, producing equipment that generates minimal heat is crucial.

To achieve this goal, many companies, including ours, use the regeneration method with bidirectional power supply technology. The higher the efficiency of the facility, the more benefits it can offer. Firstly, generating less heat from the equipment results in greater accuracy of battery capacity measurements. Secondly, we utilize discharged energy for charging, thereby reducing power consumption and ultimately minimizing air conditioning costs.

Furthermore, generating less heat can increase equipment lifespan by approximately 1.5 times and minimize the equipment's physical size. By reducing equipment size by half, customers can double their production in the same facility. To optimize efficiency, our equipment uses fewer cables, which reduces energy loss and simplifies maintenance while using efficient circuit designs for power supplies. We believe we have established a unique brand identity for us.

 

In addition to compactness and high efficiency as core characteristics of your products is the cost. Compared to some of your competitors in Europe, the US, and China, the cost of similar products you offer is extremely competitive, which is quite surprising for a Japanese company because most firms in Japan are usually known to be more expensive than other Asian counterparts. How are you able to offer compactness and all these great characteristics while maintaining a cost that is below the industry average?

Because the size is smaller, we can minimize everything in the manufacturing process, which ultimately lowers the cost. In our manufacturing style, we ensure quality by having the design and quality inspection done in Japan, while we outsource the manufacturing of the products to countries like China. However, we make it a point that the key components of the device such as the controller, software, and power supply are manufactured and supplied in Japan.

 

How is your company involved or helping toward standardization in the industry?

It is hard for us to answer this question due to the custom nature of our designs and manufacturing processes, which are tailored to meet the unique requirements of our customers.

As a company, our current emphasis is on enhancing product development and improving quality and maintainability, with the ultimate goal of creating a standardized system that will guarantee a consistent supply of products. Our strengths, including cable-less integrated power supply systems and Binding systems for prismatic battery cells, are being prioritized to create a system that will ensure a stable supply for mass-production facilities.

 

Are you looking for partnerships as you look to expand through those alternative sources, either with Japanese or foreign firms?

Since we believe that Japan can lead and dominate the world in the battery industry, we look to contribute to that by continuing to prioritize partnerships with Japanese firms to be able to dominate in the field and supply the world with the most energy-efficient batteries.

 

The automotive industry is undergoing a huge transition with the switch to EVs, where already 8% of the cars globally are EV-based. Not only is the drivetrain changing, but there are also new technologies like CASE technology being integrated into a car and more than 50% of its value is going to be derived from electrical components by 2030. With these huge disruptions, Sony, Apple, and several new startup companies across Europe, the US, and China are developing new cars. How is this disruption in the very traditional automotive industry here in Japan impacting such a young and new company like yours? Are you looking for new clients and partnerships with new emerging players in the automotive sector?

In 2009, our company was founded with the aspiration of leading the global market in providing environmentally friendly renewable energy solutions. At that time, there was a scarcity of companies prioritizing carbon-neutral initiatives. However, the growth of the renewable energy market has exceeded our initial expectations, and we are confident that we can become a leading company in this industry.

Furthermore, the growing interest in electric vehicles has led to an increase in applications to our company, which is a positive development. Although a major challenge we face is the shortage of skilled workers, we view this influx of interest as an opportunity.

Our equipment boasts exceptional efficiency and compactness, which has been instrumental in winning over many of our customers. We are committed to further enhancing our existing systems and integrating solar panels and energy storage systems (ESS) to curtail electricity usage during peak hours. Additionally, we will prioritize minimizing carbon emissions during the manufacturing process.

Bidirectional inverter and converter circuits are used in our power supply, which is one of the key components in the charge/discharge equipment. Below is a picture of one of our power supplies called Real Cycler.

 

Your group company includes Ecolonum, which does power circuits, and Dalian SoftEnergy Controls in China. Can you tell us more about the synergies that you have within the group?

The initial objective of our company was to produce detail-oriented equipment that caters to each customer's specific needs, and we were pleasantly surprised to discover that it resulted in a synergy effect in various aspects.

For instance, in China, we have Japanese staff who handle the installation and commissioning work at the site, while the Chinese staff handle maintenance and improvement work. This approach ensures high-quality equipment from the start while swiftly responding to customers' needs at the site.

Ecolonum, our subsidiary company, not only manufactures our power supplies but also procures electrical and electronic parts, which reduces purchase costs and shortens the lead time by utilizing them as our supplier for those parts. As many companies currently face a shortage of electrical and electronic parts, having a reliable supplier like Ecolonum allows us to promptly communicate with customers regarding the lead time and make necessary changes if needed.

Furthermore, our equipment's small size makes its internal structure highly complex, which deters many subcontractors from manufacturing equipment like ours. Having an integrated system from design to manufacturing enables us to produce better equipment and record all the know-how we have built up over the years in our company. This approach helps our employees improve their technical abilities, leading to inquiries and orders beyond the charge/discharge equipment.

 

What is next in your business? What do you see as the most critical next technology to research and develop for your business?

Our company's core product and technology is the development of power supplies using bidirectional inverters and converters. We continuously invest significant resources into research and development to enhance our technology in order to meet the increasing demands of our customers.

However, it is important to note that power supplies are just one of the components of our charge/discharge equipment. In order to fully optimize the capabilities of our power supplies, we also focus on developing other key components. For example, If the power supplies, which are the source for the batteries to be charged and discharged, have to have stable contact with the batteries. This is particularly important for EV batteries, where a technology to bind batteries with a fixed pressure is required during charging and discharging.

To ensure stable contact with batteries, we design and manufacture mechanical units that are tailored to our customer’s specifications in terms of dimensions, price, and quality. Additionally, we offer customers comprehensive systems for the overall post-assembly formation line, including aging, OCV testing, IR testing, sorting, and transfer systems. An integrated system that can accurately manage data from each process and transfer batteries throughout the formation line while ensuring safety and reliability is crucial. Therefore, we collaborate with specialized companies that are strong in these fields to deliver high-quality products and services to our customers.

 

Can you tell us more about your international strategy? Which countries or regions do you see as being key for your company’s midterm growth?  

The BEV market is currently being led by China and Europe, with the US following closely behind. Despite this trend, we remain optimistic about the prospects of the Japanese market, given its history of innovation and leadership in the development of secondary batteries. As such, we aim to see Japanese companies capture the largest share of the market in the near future, as we firmly believe that they can play a crucial role in addressing the ongoing energy crisis. It is worth noting that the US government has demonstrated a strong commitment to expanding the domestic battery industry, with a number of battery companies having been established in recent years.

 

Imagine we come back in six years for the 20th anniversary of your firm to have this interview with you again. Is there a particular goal or objective that you would like to have achieved by then?

The EV industry is rapidly emerging as a significant sector, and we are committed to capitalizing on this trend. We are dedicated to optimizing our technological advancements and creative potential, refusing to rest on our laurels. As a pioneering firm, we will continue to make meaningful contributions to society through our business operations. By the 20th anniversary, we are committed to expanding our operations and staying ahead of the curve in this dynamic market landscape.

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