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Nidec to buy Mitsubishi Heavy unit, bolstering EV motor business

Japan motor maker boosts know-how on drive systems with $285m acquisition

A parking spot at an electric-car charging station. Nidec is strengthening its operations in motors for these vehicles.   © Reuters

KYOTO/TOKYO -- Japanese motor maker Nidec will buy a Mitsubishi Heavy Industries unit, seeking crucial expertise in producing electric vehicle components through a deal estimated at 30 billion yen ($285 million), Nidec announced Friday.

The announcement confirms Nikkei's earlier report on the agreement. 

Mitsubishi Heavy Industries Machine Tool makes production equipment for automotive gears. Gear production requires precision and specialized skills, and Nidec hopes to use the unit's know-how to produce more gears in-house.

Nidec looks to cut costs and delivery times for EV drive systems, which it sees as a key for future growth.

Mitsubishi Heavy is restructuring due to setbacks in its aerospace business, including a development freeze on its SpaceJet. The company currently holds full ownership of the machine tools unit, which controls about 60% of Japan's market for gear-making equipment and achieved 40.4 billion yen in consolidated sales during fiscal 2019.

Nidec aims to make further inroads in the growing electric vehicles market. It began mass-producing drive systems, which consist of the motor and gears, for EVs in 2019. The company has orders related to 2.5 million vehicles through 2025.

Automakers worldwide are emphasizing EVs as China, Europe and other markets bolster emissions standards. The trend has accelerated competition over the motors that power these vehicles.

"We will actively acquire companies that have valuable technology," Nidec CEO Shigenobu Nagamori said at an earnings briefing in January, where he announced plans to boost in-house production of key parts.

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