New technology, called an e-axle or e-drive, is emerging as a new competitive front as the auto industry shifts to electric vehicles. By 2030, Nagamori says he wants a 35% slice of a global e-axle market that is forecast to be worth $20-30 billion a year by then, up from an estimated $2.8-$3 billion now.
The miniature motors that make iPhones buzz on silent helped power Japan’s Nidec to become a 1.5-trillion-yen ($14 billion) company.
In recent years, Nidec’s founder Shigenobu Nagamori has turned his attention to autos, and a technology which turns electricity stored in the battery into propulsion power.
He is betting that electric vehicles will follow the same route as room aircons, washing machines and computers, with key components, such as motor systems and central processing units, standardized and supplied by a few dominant tech firms.
“Laptops and aircons from different makers might look different outside, but you look inside, the (key) parts are all more or less the same. The gut technologies of EVs are going to become as commoditized or standardized” as these items, Nagamori told an earnings news conference earlier this year. E-axles electric vehicles and batteries will come from a few competitive suppliers, he predicted.
To ensure Nidec emerges as one of these suppliers, Nagamori, a no-nonsense 76-year-old, has set his sights on acquiring gear-maker JATCO from Nissan Motor Co and combining it with Nidec’s motor and power-control electronics business. Some details of this effort, which Nissan is resisting, are reported here for the first time. The takeover battle underscores how quickly electrification is reshaping the auto industry.
“Nidec brings to the auto industry the tech industry’s approach,” says Daiwa Securities analyst Shiro Sakamaki. “Like cell-phones and laptops, car models are already being redesigned at an increasingly rapid pace, and Nagamori is betting that trend will accelerate and automakers are going to leave the development and manufacturing of technologies such as the e-axle to suppliers.”
Nagamori declined to be interviewed for this article. Nidec declined to comment about its pursuit of JATCO.
Nidec’s Nagamori has said he believes the way to become a market leader in e-axles is to focus on making the technology inexpensive. The way to do that, he says, is by being able to produce every component and sub-technology that goes into an e-drive system, and by building up scale to produce more.
That’s in part why Nidec, a motor specialist, has been on the hunt for firms with an expertise in power electronics. It acquired automotive electronic control system producer Honda Elesys Co from Honda in 2014 and the automotive electronics division of Japan’s Omron Corp in 2019.
To close out the e-axle electric vehicle technical loop, Nidec has set its sights on JATCO, an automotive transmission producer in Fuji city at the foot of Mt. Fuji, 75% owned by Nissan.
According to two sources familiar with Nagamori’s thinking, Nidec’s founder believes JATCO is in play because of financial problems at Nissan that have already forced the automaker to sell non-essential assets, including its fleet of corporate jets.
Over the past year, Nidec has poached several Nissan executives, including its former vice-COO Jun Seki.
Nagamori succeeded in hiring Seki shortly after he was passed over for Nissan’s top job last year. News emerged late on Oct 8, 2019 that Makoto Uchida had been chosen as Nissan’s new global chief. The following morning, Seki received a call from a headhunter, said one of the sources. Nagamori wanted to sit down with him.
Shortly thereafter, Seki traveled to Kyoto to meet Nagamori, intending to rebuff the approach, the source said. Instead, Nagamori talked Seki into considering helping Nidec ride the wave of electrification sweeping the auto industry and turn Nidec into a 10-trillion-yen company by 2035.
In November, as talks between the two men progressed, Nidec contacted Nissan about its interest in taking a controlling stake in JATCO. The answer was “no,” according to well-placed sources at Nidec and Nissan, because Nissan’s top executives want to keep key e-axle technology in house. Nissan declined to comment about the matter.
By late December Seki resigned from Nissan, and on Jan 13 this year he boarded the bullet train to Kyoto, to eventually assume the position of Nidec’s president and COO. Among Seki’s first tasks: recruit more top talent from Nissan, which he did by bringing in a few of his former colleagues, and finish the takeover of JATCO.
In February, Nidec approached Nissan again about acquiring JATCO, and once more Nissan’s answer was “no,” said the same well-placed sources at Nidec and Nissan. According to these sources, Nissan’s COO Ashwani Gupta told Seki and other Nidec executives that Nissan considers JATCO “one of our core technological competences” and is only interested in talking about forming an alliance to collaborate on developing next-generation e-axle electric vehicles technology. The sources said Gupta added that if Nissan were desperate for cash, it would sell its 1.5% stake in Daimler AG before selling its stake in JATCO. Nissan declined to comment.
Nissan repeated the message on Aug 6 when two Nidec managers visited the carmaker’s global headquarters in Yokohama, one of the well-placed sources said. Then, on Aug 19, Gupta told staff at JATCO’s head office that JATCO is “an important asset for Nissan” and a “partner.” JATCO spokeswoman Masako Fujita confirmed the gist of Gupta’s remarks.
Nagamori remains confident about the prospects for Nidec’s e-axle business. He is set to pump 500 billion yen into setting up factories in China, Mexico and Poland and investing in the technology. And Nidec is engaged in what some competitors describe as aggressive pricing by cutting its price to automakers to about $1,200 to $1,300, well below the industry’s estimated average cost of $1,800.
Nidec has signed supply deals with Geely, as well as GAC Motor and its joint ventures with Toyota Motor Corp and Chinese EV upstart NIO. Nidec is also rumoured recently to have landed additional deals to supply Geely’s joint venture with Daimler and a joint venture between Great Wall Motor and BMW. Nidec declined to comment on the rumored deals. It also declined to comment about pricing.
Originally published by Reuters