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Toyota supplier Denso invests $1.6bn to boost parts for electrics

Supercharged budget follows top customer's move to release hybrid patents

Denso supplies core components for hybrid vehicles such as the Toyota Prius.   © Reuters

NAGOYA, Japan -- Leading Japanese auto parts maker Denso will spend about 180 billion yen ($1.6 billion) over three years to strengthen its ability to produce components for hybrid and electric vehicles as demand for low-emission cars is set to grow.

The investment will go toward speeding up a transfer of production of electronic parts from Toyota Motor, Denso's main customer and top shareholder .

Denso will invest about 126 billion yen in Japan and 54 billion yen overseas through the year ending March 2021, the company said on Friday.

The announcement follows plans by Toyota to open 20,000 patents on hybrid-vehicle technology to other automakers royalty free. This represents a potential boon for Denso, since the hybrid system used in Toyota's Prius relies on Denso components.

About 40 billion yen of the investment will flow to a plant near here in Japan's Aichi Prefecture, with an Electrification Innovation Center to be established on the premises in May of next year.

The total spending is roughly six times investment for the three years through fiscal 2017. Denso also has plants in the U.S., Canada and Mexico, as well as across Asia.

Competition of the Toyota production handover, which includes power control units, has been moved up to April 2020 from the original target date of 2022 or later.

Denso's strengths lie not just in power control units, but also in motors and battery control devices, among other components critical for hybrids and electrics.

Countries around the world are tightening fuel economy requirements for vehicles. China as well as U.S. states led by California have adopted rules meant to ensure zero-emission vehicles account for a certain percentage of auto sales.

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