As demand for high performance electric motors continues to proliferate, the world’s leading maker of precision motors is bullish that it can dominate the market through the mass production of cheaper and better automotive parts than its rivals.
In 2010, Shigenobu Nagamori gazed into the future and witnessed the pivot that was about to shake up the auto industry in the coming decades. It was clear that traditional gasoline-powered models would eventually be phased out and replaced by those characterised by connectivity, automation, sharing and electrification, or CASE vehicles. This marked the manifestation of Vision 2015 that set out to grow Nidec into a global enterprise group with annual sales of ¥2 trillion (US$23.4 billion) by the fiscal year 2015.
Six years later, the manufacturing juggernaut with a market capitalisation of more than $80bil is staking a claim for 35% of the global EV motor market by 2030 that is forecasted to be worth US$20 – 30 billion annually.
With European countries and several US states mandating that all new car sales be electric over the next two decades, Nidec is optimistic that the commodification of electric vehicles will follow the same route as electronic devices where key components are streamlined and supplied by a few dominant tech firms.
Under the auspices of Nagamori, Nidec has embarked on a growth offensive locally and abroad. Riding on the wave of electrification, it has acquired 39 companies spanning across four continents since the last decade in an attempt to expand its production capacity for a wider market reach. Nidec has also poached its rivals for talent, with Jun Seki, the former vice chief operating officer of Nissan, becoming the latest high-profile name to be roped in.
However, reducing the cost of supply parts remains the most significant challenge yet within the EV industry. As such, Nidec has pitched to automakers its “E-Axle” system that infuses motors, gears and inverters into a single package at a rate between $1,200 to $1,300, well below the industry’s estimated average of $1,800.
Nagamori sees Europe and China as relatively quick adopters of EVs and is ready to invest some $1.9 billion to build a factory in Serbia which will become one of the company’s largest production hubs in Europe. In tandem with that new facility, Nidec will start producing EV drive motors in France and Poland in 2022.
Amid concerns that Sino-American tensions are unlikely to thaw anytime soon, the Kyoto-based company plans to invest ¥100 billion (US$951 million) in a new motor factory in Dalian to cater to demand in the world’s two biggest economies. It already has sites in the U.S. for vehicle motors and industrial and appliance motors. All in all, the company’s global production capacity is expected to reach five million by 2025.
Jefferies’ analyst Yoshihiro Azuma observed that Nidec is determined to make its traction motors the de facto standard for EVs, similar to that of Intel’s positioning for PCs. With the global EV market sales projected to exceed 30 million by the end of this decade, Nidec is in pole position to garner the lion’s share of the demand.