TOKYO -- Nidec will expand a Chinese site still under construction in order to double capacity for electric vehicle motors, Nikkei has learned, as the maker of precision motors found in computer hard drives chases a growth field fueled by Beijing's stronger environmental regulations.
The Japanese motor maker will invest 20 billion yen to 30 billion yen ($180 million to $270 million) to build a second manufacturing facility adjoining a Zhejiang Province factory now under construction.
The second plant will roughly match the first factory's planned annual capacity of motors for 600,000 to 700,000 autos. These motors propel electric vehicles as engines do for gasoline-powered cars. The first factory is set to enter full operation in May, with the second opening in 2020.
Though China's economic slowdown prompted Nidec to downgrade its earnings forecast for the year through March, the company sees electric vehicles in the country as a growth field. Even as Chinese new-car sales shrank 2.8% in 2018 for the first decline in 28 years, the market for electric and other environmentally friendly vehicles soared by 60%.
Beijing now requires conventional car makers to produce eco-friendly models like electrics and plug-in hybrids as well. Automakers are expected to unleash a wave of green vehicles soon, and Nidec seeks to fill the need for motors.
Other parts makers likewise plan investments. Germany's Robert Bosch is moving to mass-produce driving parts for electric cars in China, and Japan's Hitachi has formed a Chinese joint venture with Honda Motor to produce electric vehicle motors locally.
Nidec's motors have been used in sedans by China's Guangzhou Automobile Group and are expected to be shipped to European players soon. The Japanese company aims to achieve sales of 200 billion yen in the business by fiscal 2025, seeking to turn auto parts into a major line of operations in addition to its long mainstay of precision motors for products such as computer hard drives.
The second China plant's output will include motors roughly 30% smaller than those churned out by Nidec's first factory -- a change expected to open more space in vehicles and let cars run for longer distances. The motors also could be fitted into smaller vehicles.
The global market for electric vehicles is seen rising nearly ninefold from 2018 levels to reach 12.23 million in 2030, according to research firm IHS Markit.
"The electric vehicle market is set to grow mainly in China and Europe, driven by environmental regulations on automakers," IHS analyst Toru Hatano said.
Several Japanese automakers, such as Toyota Motor and Nissan Motor, plan to produce electric vehicle motors in-house. But this involves a burdensome development process, spurring European automakers to procure the motors from outside companies for mass-market models. France's Groupe PSA, which handles brands like Peugeot and Citroen, created a joint venture with Nidec to make the parts. Meanwhile, Bosch and compatriot Continental are developing electric vehicle propulsion parts as well.