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Nidec to start Chinese production to ride electric car boom

Japanese motor maker will invest $274m for new plant

Nidec's traction motor system, or "e-axle," is one of the parts it is making for electric vehicles. (Photo by Motonobu Kawai).

BEIJING/OSAKA -- Nidec will spend 30 billion yen ($274 million) to build a factory in China that will produce motors for electrified vehicles, hoping to gain a foothold in the world's largest green car market.

The plant will produce traction motors for electric, plug-in hybrid and fuel cell vehicles, with mass production starting in May next year. When fully operational, it will make enough motors to supply about 700,000 electrified vehicles.

Nidec will employ the technology that goes into its computer motors to develop the vehicle motors. Compared to competitors' motors, Nidec's products will take up half the cubic volume, resulting in less load on the autos. In addition, the company will step up local procurement of components.

The factory will be located in Pinghu, a city near Shanghai and plants of General Motors, Volkswagen and other global players. China will allow foreign capital to fully own mainland auto ventures by 2022, and the one-party state is encouraging Tesla and other electric vehicle manufacturers to build factories within its borders. Incentives are also being rolled out for parts suppliers.

At the same time, China is aggressively promoting electric vehicles to combat carbon emissions. Automakers will be hit with sales and production quotas of new-energy vehicles starting next year.

About 1.42 million electric and plug-in hybrid vehicles were sold last year worldwide, according to Chinese government statistics, and China accounted for more than half of them. British market intelligence firm IHS Markit estimates that global electric vehicle demand will rise to 8.43 million units in 2030, or 11 times last year's sales.

Chinese automaker BAIC Group aims to sell 1.5 million new-energy vehicles annually by 2025. Japan's Toyota Motor will begin selling electric vehicles on the mainland in 2020. Setting up shop in the same market, Nidec hopes to capture the growing demand for motors.

Nidec expects to control a 70% global share in sales of electrified vehicle motor systems by 2025, which it forecasts will generate 100 billion yen in revenue that year. To that end, the Japanese multinational is forming a joint venture in Europe with French auto group PSA.

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