Continental bets on 'mild hybrid' batteries in JV with China's CITC

FRANKFURT, March 7 (Reuters) - Germany's Continental AG has agreed to form a joint venture with China's CITC Ltd to produce so-called "mild" hybrid batteries that add some electric power to existing petrol models without a costly redesign.

The new venture, in which Continental holds 60 percent with the rest owned by Sichuan Chengfei Integration Technology (CITC), will initially produce 48-volt battery systems at its headquarters in Changzhou, near Shanghai, with a view to opening a second production line in Europe at a later stage.

"Entering the 48-volt battery systems business ... will further strengthen our position as a system provider on the fast-growing mild hybrid market," Continental Chief Executive Elmar Degenhart said in a statement on Wednesday.

Carmakers squeezed between carbon emissions restrictions and falling sales of fuel-efficient diesels are looking at affordable 48-volt hybrids as a quick fix. Parts suppliers including Valeo and Delphi and carmakers such as PSA Group and Daimler have embraced the trend.

Continental said it was still considering making high-voltage systems based on solid-state battery cells but would for now hold out for more advances to be made in the field, a spokesman said.

Domestic rival Robert Bosch, the world's biggest automotive supplier, last month decided against producing its own high-voltage battery cells, saying investments were too risky.

CITC, through its subsidiary CALB (China Aviation Lithium Battery Co., Ltd.) will contribute its know-how in producing lithium-ion cells and enable better access to the Chinese market, according to Continental's statement.

Continental said its 48-volt system offered functions previously reserved for more expensive high-voltage systems, such as coasting, fast engine start and recuperation of braking energy. (Reporting by Ludwig Burger Editing by Mark Potter)