Nidec Corporation announced that at a meeting of the Board of Directors held on August 1, 2019, a resolution has been passed to execute a contract with GAC Components Co., Ltd. (GAC Components), a subsidiary of China-based GAC Motors, to establish a joint venture to manufacture automotive traction motors. The closing of this case will be subject to approval by competition authorities.
Nidec has been expanding and strengthening its automotive motor business, one of the Company’s strategically critical businesses, by setting the business’s target sales amount to JPY700 billion ($6.44 billion) to JPY1 trillion ($9.2 billion) under Vision 2020, the company’s mid-term strategic goal.
Car manufacturers are accelerating the pace of introducing electric vehicles (“EV”) more than ever. As this trend of car electrification intensifies, the automotive motor market, strategically important for Nidec, is forecasted to double its size to JPY6 trillion ($55.2 billion) in 2030. Among all the products in the market, Nidec’s particular focus are on the traction motor, one of the most important components to replace the existing internal-combustion engine.
GAC Components is a subsidiary of a major Chinese car manufacturer Guangzhou Automobile Group that has the sixth largest market share in the increasingly environmentally strict China. GAC Components mainly manufactures automobile interior parts, electric components, etc. not only for EVs and PHEVs under the GAC brand, but also joint ventures with Japanese car manufacturers.
GAC Components and Nidec, realising the strategic importance of traction motors in the future automobile industry, have agreed to collaborate to produce low-cost, high-efficiency traction motors for Guangzhou Automobile Group. The joint venture company will exploit GAC’s collective know-how on finished vehicles mechanism and Nidec’s drive and electronics technologies to develop, manufacture, and sell low-cost, high-efficiency traction motors mainly for the GAC Group, and later, other car manufacturers as well.
Further, the joint venture company will hire development engineers locally in China, which is abundant in such resources, to accelerate the pace of product development and design, while utilising GAC’s local purchasing capabilities to promote cost reduction.
The new joint venture company, Guangzhou Nidec Auto Drive System Co., Ltd. (tentative) will be headquartered in Guanzhou, Guangdong Province, China. The companies plan to establish the new entity in September – October 2019. The main areas of functioning of the JV will be development, production, sale, and after-sales service of automotive traction motor systems and components.
The total investment towards the JV will amount to nearly CNY600 million ($84 million). Nidec will hold 51% of the new entity while GAC Components will own 49%.