Japanese Suppliers in East China: Increasing Products and Capacities for NEVs

Strengthening business through alliances, etc., to acquire new customers



East China area
Map of automobile plants in China
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East China automobile plant map

  This report presents the activities of Japanese parts suppliers in East China. (Based on sources dated over the 15-month period from August 2020 to October 2021)

  In 2020, China produced 25.23 million vehicles (down 1.9% year-over-year (y/y)), and sold (ex-factory) 25.31 million units (down 1.8% y/y), marking the third consecutive year of decline. The COVID-19 pandemic had a significant impact on production and sales until March 2020, but then began to recover. In 2021, there was a significant increase in production and sales volumes from January to April, but from May onward, both have experienced a double-digit y/y decrease due to the implementation of power restrictions throughout China, in addition to the semiconductor shortage. As a result, in the January-October period, production volume was 20.56 million units (up 5.6% y/y), and sales volume (retail registrations) was only 20.94 million units (up 6.5% y/y).

  Even under these circumstances, the production and sales of New Energy Vehicles (NEVs) are increasing. In 2020, NEV production volume was 1,366,000 units (up 7.5% y/y) and sales volume was 1,359,000 units (up 10.3% y/y). In the January-October period of 2021, production volume and sales volume appear to have increased significantly by approximately 180% y/y to 2,256,000 units and 2,527,000 units, respectively. Furthermore, the ratio of EVs to total NEV sales is 82.7%, which is most of the market. PHVs and FCVs account for 17.3% and 0.04%, respectively, and the proportion of each type of vehicle has been almost the same for the past several years.

  China's major automakers, including FAW, Dongfeng, Changan, and Geely, have announced their 14th Five-Year Development Plans (2021-2025), which call for accelerating the development of the "New Four Modernizations" (electrification, networking, intelligentization, and sharing) and especially strengthening the areas of autonomous driving, semiconductor chips, hydrogen energy, batteries, and battery charging/battery replacement. Emerging EV automakers are also developing product technologies and expanding their production capacity. VW will build its first fully-owned battery system assembly plant in Anhui Province in China, and will also build a new battery plant at its existing Changsha Plant. Japanese automakers such as Toyota, Nissan, and Honda are also rushing to respond to the demand for NEVs.

  Japanese suppliers are also responding to these trends by introducing new NEV-related products, strengthening their production systems, and forming alliances with Chinese companies.

  In terms of new product launches, NSK has jointly developed a high-power single-pinion EPS for EVs with VW, which will be manufactured for VW starting in 2023. Neturen Co., Ltd. has started production of ITW, a thick diameter high strength spring steel wire for EVs, for Chinese manufacturers. Envision AESC (Automotive Energy Supply Corporation) started operation of a new plant for new rechargeable batteries for automotive use. Meidensha Corporation will start operation of a new plant to produce motors and generators for EVs in 2021.

  In terms of strengthening its production system, Hitachi Metals will build a new low-cost production line for neodymium magnets for EV motors. Kotani Corporation is expanding its plant for powertrain components with an eye to NEV demand. Ferrotec Holdings Corporation (Ferrotec HD) will increase its production capacity of power semiconductor substrates during FY2021 to meet the increasing demand for EVs. Marelli is building a new plant for air conditioners and heat exchangers for NEVs.

  In terms of strengthening its business structure through alliances, ROHM Co., Ltd. has established a joint venture with the Zhenghai Group for SiC power modules for electric vehicles. ROHM also formed a strategic partnership with Geely Automobile Group for SiC power devices for EVs, and opened a joint technology laboratory with United Automotive Electronic Systems Co., Ltd (UAES), a major Chinese automotive component manufacturer.

  In the area of ADAS and autonomous driving, Toyoda Gosei started production of millimeter wave radar-compatible emblems and inflators. Nihon Dempa Kogyo Co., Ltd. (NDK) is expanding its production facilities for crystal units for ADAS. Marelli has formed a business alliance with Wuhu Sensortech Intelligent Technology Co., Ltd. (WHST), a Chinese manufacturer of millimeter wave radar and LiDAR.

  In the area of semiconductors for automotive applications, Mitsui High-tec is expanding its production facilities for lead frames, and Ferrotec HD is building a system to increase production of semiconductor components.

  To strengthen its production system for existing products, Sumitomo Chemical established its fifth manufacturing base for PP compounds, Seki Corporation established its second precision pressed parts plant, Teijin Frontier plans to expand its facilities for airbag base fabric, Murata Manufacturing started operations at its second plant for laminated ceramic capacitors, and Aichi Electric started operation of a new plant for motors for electric compressors for car air conditioners. The construction of Murata Manufacturing's second plant and Aichi Electric's new plant was delayed by 10 months and 6 months, respectively, from the original plan due to the COVID-19 pandemic.

  As for the acquisition of new customers, Nippon Seiki received an order from Geely Automobile for head-up displays and started production for the "Lynk & Co. 09" SUV, while Yamaha received an order from Geely Automobile for a standard equipment in-car audio system and started production.

Related Reports:
Key Allies China analysis on NEV market in November 2021 (Dec. 2021)
China market Q3 2021 (2): VW to produce batteries in Hefei & Changsha (Nov. 2021)
Chinese market Q3 2021 (1): FAW, Dongfeng, Geely and Others Announce Five-Year Plans (Nov. 2021)
China FY2020 NEV Credits: Tesla No. 1, Emerging EV OEM WM Motor ranks in top 10 (Oct. 2021)
2021 H1 China market: New vehicle sales up to 12.88 million units, NEVs reach 1.21 million units (Aug. 2021)

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