Japanese Suppliers in East China: Responding to NEV market expansion

Increase of production and sales of components and materials for electric vehicles

2019/05/30

Summary

華東周辺
China automobile plant map (Click to open site map)
East China automobile plant map

 This report presents the trends of Japanese suppliers in East China. (Based on sources dated roughly over the 15-month period between February 2018 and April 2019.)


 The automobile production volume in China in 2018 was 27.81 million units (a decrease of 4.2% from the previous year) and sales volume (factory shipments) was 28.08 million units (a decrease of 2.8% from the previous year), showing a slowdown in market growth. The main factors for the slowdown are the impact of the US-China trade war and the reaction to the last minute demand surge at the end of 2017 before the end of the tax reduction policy for small passenger cars. By vehicle type, the sales of SUVs decreased 2.5% from the previous year, to 9.995 million units and sedan/hatchback sales dropped 2.7% to 11.528 million units. The sales decline in the latter half of the year was especially precipitous; sales in every month from July decreased below the previous year’s results.

 On the other hand, sales of EVs, PHVs, and other NEVs (new energy vehicles) increased significantly in this period to 1.256 million units, an increase of 61.7% over the previous year. From January 2018, the Chinese government implemented a policy based on its “Notice for Tax Exemption for Purchase of New Energy Vehicles” which exempts NEVs from the vehicle purchase tax. At the same time, the vehicle purchase tax rate applied to passenger cars with engine displacements less than 1.6 liters returned to 10%. In addition, an NEV credit system was applied to companies with annual production and sales of ICE vehicles (gasoline vehicles, diesel vehicles, natural gas vehicles, and hybrid vehicles) over 30,000 units per year, accelerating the introduction of new NEV models and system development.


 The East China region is home to SAIC, the largest automobile group in China. Further, the headquarters of the Chinese OEM Geely Group is in Zhejiang province; Chery, the Chinese OEM with the largest export volume is in Anhui province as is Anhui Jinghuai Automobile (JAC) which formed a joint venture with Volkswagen for EVs. In addition, other OEMs including emerging EV maker NIO, FMC (Future Mobility Corporation) which manufactures models of the Byton brand, and WM Motor (Weltmeister Motor Technology Company, Ltd.), have their headquarters in the East China region.

 In March 2019, Daimler and Geely announced joint development of the next generation EV Smart with production in China at a dedicated plant. In 2018, the VW Group unveiled the “SOL E20” EV with Anhui Jianghuai Automobile (JAC), and further announced the development of a smart mobility platform with VW-subsidiary Mobility Asia Smart Technology Co., Ltd. (Mobility Asia) and JAC in Hefei city. Tesla built a plant with a single investment in the Shanghai Lingang district. SAIC and Huawei signed a strategic alliance agreement to work together on electrification and intelligent manufacturing. FMC, which acquired Tianjin FAW Huali Automobile Co., Ltd., will move its manufacturing base to Nanjing and plans to manufacture Byton models there by the end of 2019.


 In response to these NEV related activities, Japanese automotive components manufacturers are increasing their production and sales of components and materials for electric vehicles such as EVs and PHVs. Nidec’s dedicated E-Axle plant operation, Sanden Holdings’ expansion of electric compressor production, and Mitsubishi Chemical and Ube Industries consolidation of lithium-ion battery electrolyte production are all evidence of this trend. Also, for the future, Panasonic, for automotive lithium-ion batteries, and Meidensha, for motors and inverters, are reported to be considering local production of EV components. There is also movement to respond to the increased demand for plastic products accompanying electrification and weight reduction; the Teijin Group will build a new plant for automotive resin products.

 

Trends of Japanese Suppliers (* denotes new product introduction)

New company (plant)
Establishment / operation / investment
Jiangsu province JATCO Ltd. (CVT: new company + new plant)
Toyota Boshoku Corporation (Interior materials: new company + new plant)
Dowa Holdings Co., Ltd. (Tin plating: new company + new plant)
Mitsubishi Chemical Corporation / Ube Industries, Ltd. (Electrolytes for Lithium ion battery: new company, production consolidation)
MEC Company Ltd. (Chemicals for electronic substrates + new plant)
Shandong province Nittan Valve Co., Ltd. (Engine valves: establishment of new plant)
Anhui province Aisin Seiki Co., Ltd. (Aluminum die cast parts for automatic transmissions: new company + new plant)
Production capacity
expansion
Capital increase for production lines, equipment, etc. Shanghai Mitsubishi Heavy Industries, Ltd. (Turbochargers: facilities expansion)
Jiangsu province NTN Corporation (Constant velocity joints: new line installed
Kogi Corporation (Castings for automotive press dies: equipment expansion)
Nichicon Corporation (Film capacitors for EVs: production expansion)
NGK Spark Plug Co., Ltd. (* Wide-range air-fuel ratio sensors: production started, new line installed)
Nippon Piston Ring Co., Ltd.  (Piston rings: new line installed)
Hakkai Inc. (Plastic parts: equipment expansion)
Panasonic Corporation (*Automotive Lithium-ion batteries: considering 2 plants)
Mitsui Kinzoku ACT Corporation (Side door latch: new line installed)
Musashi Seimitsu Industry Co., Ltd. (Differential case: equipment expansion)
Zhejiang province Aichi Steel Corporation (Motor magnet processing: equipment expansion)
Kobe Steel, Ltd. (Cold-forging wire: equipment expansion)
Anhui province TPR Co., Ltd. (Diesel engine cylinder liners: new line installed)
Plant expansion, building expansion Shanghai Sanden Holdings Corporation (Electric compressors: relocation, new plant)
Jiangsu province Iriso Electronics Co., Ltd. (* Automotive connectors: new plant)
Envision AESC (Automotive rechargeable batteries: new plant)
Teijin Limited (Plastic products such as battery cases: new plant)
Daikin Industries, Ltd. (* Fluoro-chemicals: new plant)
Nichias Corporation (Insulators: relocation, new plant)
Nichirin Co., Ltd. (Automotive hoses: relocation, new plant)
Primearth EV Energy Co., Ltd. (Automotive nickel metal hydride battery modules: building expansion)
Zhejiang province Ogura Clutch Co., Ltd. (Clutches for vehicle air conditioners: new plant)
Nitto Seiko Co., Ltd. (High value-added screws: new plant)
Nidec Corporation (E-Axle: new plant)
Meidensha Corporation (Motors and inverters for electric vehicles: considering production system)
Anhui province TPR Co., Ltd. (* Plastic seal rings for automatic transmissions: new plant)
Business structure strengthening
(Plant acquisition, joint ventures, bases for development / sales / testing)
Shanghai Keihin Corporation (Products for EVs: establishment of sales office)
Sekisui Chemical Co., Ltd. (Materials for electronics: established technical service center)
Toyoda Gosei Co., Ltd. (Changed regional headquarters to holding company)
Nippon Piston Ring Co., Ltd. (Piston rings: expansion of technical service office)
Piolax, Inc. (Established sales headquarters, established design and development department)
Mabuchi Motor Co., Ltd. (Established headquarters)
Jiangsu province Eagle Industry Co., Ltd. (Seals for EV motors: establishment of research and development base)
Tokai Rika Co., Ltd. (Switches, seatbelts, etc.: establishment of sales and technical bases)
Toyoda Gosei Co., Ltd. (Safety systems, interior components: merger of subsidiaries)
MinibeaMitsumi Inc. (* Sensors for automotive motors: production started, establishment of development base)
Zhejiang province Aisin AW Co., Ltd. (Automatic transmission components: establishment of joint venture company)
Sumitomo Riko Co., Ltd. (Anti-vibration rubber, automotive hoses, etc.: establishment of sales headquarters)
Di-Nikko Engineering Co., Ltd. (Parts procurement: establishment of joint venture company)
Jiangxi province Central Glass Co., Ltd. (Electrolyte materials for Lithium-ion batteries: establishment of joint venture company)
Mabuchi Motor Co., Ltd. (Steel material processing for small electric motors: acquisition)
Other
(production transfer, production reduction, etc.)
Jiangsu province Sanyo Chemical Industries, Ltd. (Additives for paints: transferred to Thailand)
Zhejiang province Fujikura Composites, Inc. (Automotive rubber: delayed construction of new plant)
Shandong province Nihon Parkerizing Co., Ltd. (Heat treatment processing: reduction in investment)
Anhui province Ahresty Corp. (Die castings: reduced production)

 

Related Reports:
2019 Sales Forecast in China (CAAM): NEVs to make up 1.6 million of 28.1 million vehicles sold (Apr. 2019)
2018 China market: 28.081M units for new car sales, 23.71M units for passenger cars (Feb. 2019)

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