TOKYO -- Japanese motor maker Nidec, in a new midterm business plan unveiled Wednesday, predicted a 150% sales surge through fiscal 2025, as the world's largest motor maker vows to have as a customer the fastest-growing manufacturer of electric cars in China, SAIC-GM-Wuling Automobile, which makes $4,400 mini EVs in China.
"Wuling is the world's most demanding automaker in terms of purchase price," said Jun Seki, Nidec's president and CEO, at a news conference the same day. "We will be able to improve our competitiveness if we can satisfy a carmaker as demanding as Wuling," Seki said.
He added that the inexpensive Chinese mini EVs have expanded the auto market beyond its traditional customer base by bringing cars within the reach of people who could not afford them before. He predicts the main battleground in the auto market will be in inexpensive cars, not expensive ones.
"We are not afraid of price competition with Chinese suppliers. We will offer EV motors that are just as affordable, but of higher quality," he said.
Earlier on Wednesday, Nidec announced that it is forming a joint venture with Taiwan's Foxconn, a move that will intensify competition between traditional automakers and new entrants in the rapidly growing EV segment.
The joint venture for EV motor production will be formed with Foxconn and its auto-making subsidiary in Taiwan in 2022.
Nidec has emerged as an auto industry disrupter by promising to supply drive motors to any aspiring EV makers, including Chinese upstarts, Foxconn and Apple.
The company's latest midterm business plan predicts sales at the Kyoto-based company will reach 2 trillion yen, up 25% versus the previous year, in fiscal 2022; 4 trillion yen, up two and a half times, in fiscal 2025; and 10 trillion yen, a nineteenfold increase, in fiscal 2030.
"We've presented achievable targets. We are not blowing smoke," said Shigenobu Nagamori, Nidec's founder and chairman. He said the company he set up 48 years ago in a barn now attracts talented people that it was unable to before, allowing Nidec to make bigger acquisitions and hire even more talented people. Nidec announced last year that it will raise wages by 30% in the next three years.
Nagamori is known for his successful overseas acquisitions, a quality seen as relatively rare in Japan. "The acquisitions we will make in the future will be bigger in scale," Nagamori predicted.
Nidec reported a 60% rise in operating profit from a year ago for the April-June quarter on the back of robust demand for computer and appliance motors.
The company has been focusing on investments in motors for electric vehicles as part of its push into the EV sector, even as the move is expected to increase depreciation costs and slam its bottom line in the short term.
Nidec aims to be the world's dominant EV motor supplier by grabbing a market share of around 45% by 2030.
Quarterly operating profit came to 44.5 billion yen ($405 million) as sales increased 33% to 447 billion yen.
The company maintained its earnings estimate for the fiscal year ending March, forecasting a 13% increase in operating profit to 180 billion yen on a 5% rise in sales to 1.7 trillion yen.
The earnings release comes after the company installed Jun Seki as president and CEO after the annual shareholders meeting in June, with the founder and largest shareholder, Nagamori, serving only as chairman.
But Nidec is facing headwinds from global semiconductor shortages and tough price competition in the Chinese EV market.
Vehicle motors account for about a fifth of Nidec's sales, as they are used in power steering, seats and other parts.
In China, new vehicle sales have fallen before year-ago levels in May and June amid the semiconductor shortage.
New energy vehicles -- such as EVs and fuel cell vehicles -- have been doing well in China, but they are dominated by budget models, such as $4,400 mini EVs made by SAIC-GM-Wuling Automobile of China, a market not served by Nidec.
In Japan, new auto sales in the first six months of the year grew 11.6% from a year ago, but fell 10% short of the 2019 level due to the chip shortage.
Shortages in production materials are likely to continue, at least through summer, said Seki. "It's hard to predict when the shortages will be eliminated. I expect production to return to normal by around the January to March quarter."