OSAKA -- Nidec, the Japanese maker of precision motors, said Thursday it will form a Chinese joint venture with a unit of Guangzhou Automobile Group to develop and manufacture electric vehicle motors for the promising local market.
Nidec will own 51% of the 600 million yuan ($87.1 million) company, while GAC Components holds the rest. They aim to launch the Guangzhou-based venture by October pending approval from Chinese authorities.
The Japanese company has positioned EV motors as a growth area, with China as the principal market for the business. Demand for electric vehicles is expected to soar, due primarily to rollouts of environmental regulations.
This venture looks to develop and manufacture traction motors and the underlying components. The company also will handle sales and servicing. Beyond supplying Guangzhou Automobile Group, the venture seeks to do business with other automakers inside and outside of China. The partnership will combine Guangzhou Automobile's vehicle assembly know-how with Nidec's motor expertise.
This will be Nidec's third Chinese production site for drive motors, alongside a location in Zhejiang Province near Shanghai and another one planned in the city of Dalian. GAC New Energy Automobile, another Guangzhou Automobile subsidiary, adopts Nidec's motors for several EV models.
Nidec has set a sales goal of 2 trillion yen ($18.4 billion) for fiscal 2020, with the on-board automotive business contributing 700 billion yen to 1 trillion yen. In July, the orders for traction motors covering fiscal years 2020 and 2021 stood at 800,000 units, or roughly double the volume in April.
"We will definitely become the world's foremost company in this field," said Shigenobu Nagamori, Nidec's chairman and CEO.