Matsushita to foot US$172M Nokia battery bill

Replacing the batteries in 46 million Nokia cell phones will cost Japanese consumer electronics maker Matsushita as much as US$172 million, the company said today after it struck a deal with Nokia to cover all costs.

Earlier this month, Nokia said it would replace batteries made by Matsushita Battery Industrial Co. because there was a risk of overheating. No injuries had been reported, but 100 cases of short-circuiting batteries had been filed.

According to Nokia, which unveiled a free replacement program, all the potentially dangerous batteries were made by Matsushita — better known to consumers for its Panasonic brand name — between December 2005 and November 2006, and packaged with phones sold in the same stretch.

Friday, the two companies jointly announced that Matsushita would shoulder the financial burden. “Matsushita Battery has agreed to cover the direct costs associated with the product advisory, including, among other things, logistics costs, call center costs and replacement battery costs,” Masatsugu Kondo, the president of Matsushita Battery, said in a joint statement with Nokia.

Matsushita estimated the total cost at between $86.3 million and $172.5 million, considerably lower than the range pegged by Japanese analysts, who had earlier figured the recall and replacement would cost up to $431 million, with some even raising the bar as high as $1.2 billion.

Nokia’s troubles are just the latest involving the rechargeable lithium ion batteries that power most consumer electronics gear. Computer laptop makers, for example, continue to struggle with battery recalls. Less than two weeks ago, Toshiba Corp. recalled additional defective batteries. Last year, virtually every laptop vendor — including Apple Inc., Dell Inc. and Sony Corp. — swapped out millions of bad batteries that posed fire hazards. Matsushita manufactures some of its batteries in China but has not said whether the defective units used by Nokia came from its factories there. Most of the battery recalls in the past 12 months, however, have involved models made in China.

Nokia has set up a page on its Web site to help customers identify batteries that need to be replaced.

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