TOKYO -- Demand for automobiles will more than double as cheap electric vehicles become available in China, said an executive at Nidec, the world's largest maker of electric motors, on Thursday.
Jun Seki, president and chief operating officer, made the ambitious forecast during an online briefing of the company's annual results.
Global auto demand currently totals about 90 million but Seki said: "EVs will create additional demand of 100 million to 200 million."
Indeed, the $4,400 mini EVs made by SAIC-GM-Wuling Automobile of China have been hugely popular. Seki said those EVs "have created demand among people who previously couldn't afford cars."
Shigenobu Nagamori, Nidec chairman and CEO, agreed, saying: "Growth of the EV market will be led by small cars," and not expensive models.
Nidec reported on Thursday a 47% increase in operating profit to 160 billion yen ($1.48 billion) in the year ended March from a year ago on the back of strong demand for personal computers and home appliances, along with a global shift to electric vehicles.
Nidec also saw sales rise 5.4% to 1.618 trillion yen over the same period.
For the next fiscal year, Nidec expects a record operating profit of 180 billion yen, up 12% from a year ago. It sees sales rising 5.1% to 1.7 trillion yen, which will also be a record. The company said it had kept estimates conservative, given a slowdown in auto production due to a global dearth of semiconductors.
Nidec produces electric motors for cars, appliances and computer hard disk drives.
The company, originally a maker of personal computer components, has moved into other areas in recent years, such as home appliances and automobiles, where electric motors are more widely used than before.
Nidec derives more than 80% of revenue from overseas but suffered a setback as the U.S.-China trade war has intensified since 2018. It was hit again in early 2020 by the coronavirus outbreak.
Business has started to improve since late last year as auto production and investment in EVs rebounded worldwide.
The pandemic has resulted in surging demand for small motors used in notebook computers and home appliances.
On Thursday, Nidec announced too that Nagamori's CEO position will be assumed by Seki, on top of his title as president, after a shareholders' meeting in June. Nagamori founded Nidec 48 years ago and is the largest shareholder with a 8.4% stake
Nagamori will remain as chairman, with the right to represent the Kyoto-based company, but will leave management to Seki, a 59-year-old former Nissan co-chief operating officer, freeing him up to make speedy decisions.
"Given the extremely competitive business environment, it is necessary to make the organizational structure as simple as possible to allow for quick decision-making and nimble operations," Nagamori said.
Nagamori is regarded as a charismatic business leader who has created from the scratch the eighth biggest company in Japan with a valuation of 8.3 trillion yen ($77 billion).
Seki joined Nidec in January last year and was appointed COO three months later.