TOKYO -- Car prices will fall to below $3,000 each, creating new demand in India, Africa and the Middle East, said Shigenobu Nagamori, chairman and CEO of the world's largest motor maker Nidec, on Monday.
"The price of a car will drop to as low as 300,000 yen ($2,890), resulting in a spike in demand for cars," said Nagamori during the earnings announcement for the April-December period.
The market disruption is already happening, Nagamori said. He pointed to China's $4,300 electric vehicle released in July, which quickly became the country's best-selling EV, surpassing the Tesla Model 3. The car is distributed under the Wuling brand.
Products similar to the Wuling will emerge in India, Africa and South America and expand the entire market for new cars, Nagamori said. The arrival of such inexpensive cars will drive the global car market to grow to 300 million units in the future, from the current 80-90 million units, he said.
"You will be a loser if you run away from price competition," Nagamori warned.
Nidec, known as the world's No. 1 supplier of motors for computer hard disc drives, recently branched out into the business of producing EV traction motor, a key component along with the battery. Nidec's goal is to dominate that market by producing EV motors much more cheaply than any of its competitors.
"There is no escaping a price war. Motors will become a commodity," he said. "The price of EV motors will drop to a fifth. We have to ready ourselves for that."
The EV traction motor business is yet to be profitable, as the company is focused on making investment and expanding its production capacity. Nidec said that the company is getting a lot of queries from automakers around the world, especially since late last year when countries including Japan and the U.K. announced bold plans to shift toward EVs.
Nidec's earnings last year were lifted by growing demand for energy-saving technology.
Demand for brushless motors, which help reduce energy consumption and are a specialty of Nidec, has soared in countries like China, Nagamori said. As China grows wealthier, demand for high-quality, eco-friendly products has increased, he added.
Nidec on Monday reported a 24% increase in operating profit from a year before for the nine months through December on the back of strong demand for home appliances and personal computers and a global shift to electric vehicles.
Nine-month operating profit came to 115.5 billion yen ($1.1 billion) as sales rose 2.2% to 1.18 trillion yen.
For the year ending March, the Kyoto-based company expects the first increase in operating profit in three years to 155 billion yen, up 42.8%, revising up the previous estimate of 140 billion yen. The sales forecast is kept unchanged at 1.55 trillion yen, up 1.0%.
Last year, Nidec was hit by a plunge in demand for auto-related components as the pandemic shut down auto plants, bringing production of parts to a halt. But a recovery in auto output later in the year and surging demand for notebook computers and appliances have boosted demand for Nidec's small motors. China's swift economic recovery also helped Nidec's business despite the ongoing trade war. China accounts for a quarter of Nidec's sales.