Shenzhen Inovance Technology Co., Ltd. Business Report FY ended Dec. 2023

Financial overview

(CNY millions)

	FY ended Dec. 31, 2023	FY ended Dec. 31, 2022	Rate of change（%）
Company-wide
Sales	30,419.93	23,008.31	32.21%
Operating income	5,000.77	4,469.63	11.88%
Ordinary income	5,000.24	4,476.62	11.70%
Net income	4,775.57	4,324.49	10.43%
Sales by business segment
Industrial automation business	15,038.45	11,464.53	31.17%
Elevator system business	5,291.21	5,161.94	2.50%
New Energy Vehicle / Railway transportation business	9,920.29	5,551.55	78.69%
Industrial robot business	169.97	560.86	(69.69%)

Factors

1) Company overall
-In 2023, the external conditions and the sluggish macroeconomic situation led to weak demand in the industrial market: the demand in the industrial automation industry was sluggish, but the demand in the elevator industry was stable. The New Energy Vehicle industry grew comparatively rapidly. Faced with an uncertain external environment, the company adjusted its business strategy in a timely manner, further implemented refined management, and increased management efforts to reduce costs, control expenses, and improve efficiency. The company's operating income maintained rapid growth.

2) New Energy Vehicle business
-In 2023, the New Energy Vehicle industry maintained rapid growth, and the industry penetration rate continued to increase.

Business in 2023

-In 2023, the New Energy Vehicle-related business were operated by the subsidiary Suzhou Inovance Automotive Co., Ltd. (Inovance Automotive), with the goal of becoming a global supplier of electric drive systems (e-Axles) and power systems for New Energy Vehicles.

1) Passenger car market

-Orders for about 30 mainstream platform projects were received fom domestic and overseas customers. The fourth-generation product platform has fully realized SOP and has begun to be delivered in batches. The latest iteration of the fourth-generation products mainly include:

Fourth-generation powertrain products: Adopt the design of electronic control, integrated motor and reducer, equipped with oil-cooled hairpin motor with a maximum speed of 21,000rpm, 800V high voltage platform and SiC power module. Can be applied to both 400V voltage specs and asynchronous motors.
Fourth-generation single motor controller: Based on a flat and modular design concept, adopts 800V high voltage platform and SiC power module. Suitable for compact to mid- and full-size EVs and range-extender passenger cars, integrated mounting with various motors and reduction gears, and front/rear drive layouts.
Fourth-generation hybrid dedicated dual-motor controller: Adopts a highly integrated design solution, integrating two motor controllers, step-down DCDC and PDU, and can integrate the boost module. Suitable for compact, mid- and full-size plug-in hybrid vehicles (PHEV) and range extender passenger cars.
Fourth-generation power supply products: Based on the design concept of decoupling DCDC and OBC, it adopts a down-sized and lightweight design solution. Its volume is reduced by 40% compared with the third-generation products.

2) Commercial vehicle market

By 2023, the number of motors installed in new energy logistics vehicles reached 99,265 units, recording a 35.8% share of the domestic market in China and securing the top share.
The company acquired several important customers and achieved mass production in the field of new energy heavy-duty trucks in China. Maintained good market share with mainstay models.
As part of efforts to expand markets outside of China, the company has increased orders for commercial vehicle projects by proactively approaching customers outside of China as the electrification of commercial vehicles accelerates.
In the field of new energy buses, the latest SiC 7-in-1 controller was put into mass production and achieved volume sales.
Regarding the technology platform, the company makes use of passenger car technologies such as functional safety, power semiconductors, motor inner groove cooling, hairpin motors, etc. The efficiency and power density of commercial vehicle platform products were significantly improved.

New product

-Suzhou Inovance Automotive Co., Ltd. (Suzhou Inovance) announced that a prototype of the PA5X0, its first all-in-one e-Axle, came off the production line. High in integration, light in weight, and small in size, the PA5X0 is specifically developed to save space and reduce curb weight for users and is widely used in A0- and A-Class passenger and commercial vehicles. (From an Inovance Technology press release dated March 4, 2024)

Exhibitions

-Suzhou Inovance Automotive Co., Ltd. (Inovance Automotive) announced its participation in the IAA Mobility 2023 exhibiting a number of new products such as a distributed assembly and an inverter. With a wheel torque of 7,800Nm or higher, the distributed assembly eliminates the mechanical differential gear and is capable of electronic differential and intelligent torque distribution functions. The PD40 inverter is compatible with 400V and 800V voltages and meets the ASIL D functional safety management standard. (From an Inovance Automotive press release dated August 29, 2023)

Business alliance

Year	Partners	Details
Apr. 2024	Fuyao Glass Industry Group Co., Ltd.	Inovance Technology and Fuyao Group signed a comprehensive technical cooperation agreement at the latter’s headquarters. As CASE (Connected, Autonomous, Shared, and Electric) has become a development trend in the automotive industry, the new development requirements of the automotive market for diversification and structural optimization are driving manufacturers to integrate more and more new technologies into automotive glass, refreshing requirements for the glass. Inovance Technology and Fuyao Group will work together to further strengthen the tackling of original leading technologies in areas such as equipment automation and digital energy management. They will promote the innovation of China’s glass equipment technology to continuously advance its high-end transformation, intelligentization, and green development. (From an Inovance Technology press release dated April 19, 2024)
Jun. 2023	SKF	With ceramic ball bearings the basis of cooperation between the two parties, they will strengthen R&D on and applications of standard ball bearings and tapered bearings. In addition they will search for information and share data under the “double carbon” goal to put their products in the leading position in terms of carbon reduction.

Production plants

Plant	Zone	Area (square meters)	Details
Suzhou Plant	Zone B	130,000	PCBA (printed circuit board assembly) production line on the 4th floor of the B1 area. Production capacity: 1 million pieces/year DC/DC converters, on-board chargers (OBC) production line on the 4th floor of the B1 area. Production capacity: 120,000 pieces/year Inverter production line on the 3rd floor of the B1 area. Production capacity: 300,000 units/year
Suzhou Plant	Zone C	40,000	Drive motor (e-motor) production lines on the 1st and 3rd floors of the C3 area. Production capacity: 400,000 pieces/year e-Axle production lines on the 1st and 3rd floors of the C3 area. Production capacity: 100,000 pieces/year
Changzhou Plant	-	Under construction	Phase one reached the point to where mass production was started in 2022. In addition, phase two of the construction project has begun.

R&D Expenditure

	FY ended Dec. 31, 2023	FY ended Dec. 31, 2022	FY ended Dec. 31, 2021
R&D expenditure (CNY millions)	2,624.15	2,229.27	1,685.46
Ratio to sales (%)	8.63	9.69	9.39
R&D personnel (persons)	5,482	4,793	3,560
Percentage of employees in R&D (%)	23.15	23.66	21.02

R&D system

-The R&D center conducts work in technologies such as inverter module design, NVH design, EMC simulation, and IGBT online junction temperature estimation, and has applied for 286 patents.

-Investment for the test center CNY 250 million. The center covers an area of more than 10,000 square meters, has 179 engineers and 136 functional, performance, durability, environmental, NVH, EMC, physical and chemical analysis test benches. Obtained CNAS certification and information security management system certification, as well as CAERI, UL, and Acertifications.

-The company has obtained ISO 9001, OHSAS18001, ISO14001, TS16949, ESD S20.20, ISO26262, ISO17025, IATF16949, CL1124, DA2920 certification.

-Passed VW Formel-Q audit in December 2017 and VW Software and Logistics audit in 2018. In 2019, passed NSA audit for VDA6.3 (SGS third party certification) and PSA. Passed Nissan's quality system audit in 2020. Passed Volvo and FCA quality system audits.

-Suzhou Inovance Automotive Co., Ltd. (Inovance Automotive) has passed the ISO/SAE 21434 network security management system certification. The company had previously passed the ISO27001 (Information Security Management System) certification and the TISAX (a general information security assessment of the German automobile industry) certification. (From an Inovance Automotive press release dated October 14, 2022)

-Suzhou Inovance Automotive Co., Ltd. (Inovance Automotive) announced the obtainment of ASPICE CL-3 certification. The company launched the construction of the ASPICE platform in 2016 and passed ASPICE L2 automotive software process improvement and capability verification standard in 2019. (From an Inovance Automotive press release dated August 25, 2023)