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Automobiles


CHINESE EV SUPPLIERS EYE JAPAN AS DOMESTIC COMPETITION HEATS UP

Push by carmakers to electrify offers new opportunities abroad


Moves by automakers to electrify their product lineups offer new opportunities
to China's EV parts suppliers. (Photo by Yuki Kohara) 
CISSY ZHOU, Nikkei staff writerNovember 2, 2023 17:28 JST | Japan
CopyCopied


TOKYO -- Chinese auto parts makers are eyeing overseas markets as the country's
electric vehicle boom intensifies competition at home, with some seeing
opportunities particularly in Japan.

BYD, China's largest EV maker, which is poised to overtake Tesla in pure
electric vehicle sales this year, and three Chinese component suppliers have put
in high-profile appearances at the Japan Mobility Show, the flagship industry
event for the world's fourth-largest auto market. Recently rebranded, the event
has traditionally been dominated by local brands.

"We hope to supply our power batteries to major Japanese auto manufacturers
after our yearslong cooperation with Nissan," William Wang, chairman and founder
of Sunwoda Electronic (SEVB), told Nikkei Asia on the sidelines of the show.



"The development of China's electric vehicle industry is very fast. Ten years
ago, when people talked about batteries, they would probably think of Japanese
brands like Sony and Panasonic. However, in the past decade, China's battery
industry has made tremendous progress across the entire supply chain and there
is hardly any difference between the Chinese ones and the Japanese ones now,"
Wang said, adding that his company is in discussions with several other leading
Japanese auto manufacturers about potential battery supplies.

Sunwoda started to mass produce power batteries in 2019 and is now one of the
world's 10 biggest EV battery manufacturers, as China dominates the global
industry.

The market for China's so-called new energy vehicles, which include pure
electric vehicles and plug-in hybrids, has benefited greatly from various forms
of state support, including massive subsidies. Component makers have thrived
along with the sector, although there has been a shakeout in recent years. There
were hundreds of EV manufacturers and power battery makers at the height of the
boom, but now only a couple dozen of each remain.

William Wang, chairman and founder of Sunwoda Electronic, is looking to expand
his company's business with Japanese automakers. (Photo by Yuki Kohara) 

Both China's FAW Group and Changan Automobile said earlier this year that
China's power battery industry is facing a "serious overcapacity problem,"
manufacturers continue to expand production capacity.

Wang disputed that assessment, saying any overcapacity in China's battery sector
is cyclical and partly a factor of how capacity is measured.



"When calculating the production capacity, it is necessary to only consider the
active and operational production lines, because the phased-out ones can no
longer produce the upgraded products required by our auto clients," Wang said.
"The cost of retrofitting these old production lines is often prohibitively
high, so we need to establish a new production line to meet customer needs."

Sunwoda has also started building a factory in Hungary, even though the costs
are expected to be higher than in China. Wang said the move is to "comply with
the policy requirements of the European Union and respond more quickly to
clients in the region."

While Wang did not directly address competition levels at home, another Chinese
auto supplier at the Japan Mobility Show was unequivocal.

"We are here because the competition at home is crazy, and we hope to find some
Japanese clients here, because profit from overseas clients is much higher than
from domestic clients," Shenzhen-based Industrial Man, whose biggest client is
BYD, told Nikkei on the sidelines of the event.

This was the supplier's first time attending the Tokyo event, which runs through
Sunday.

"We are here because the competition at home is crazy, and we hope to find some
Japanese clients here

Shenzhen-based auto supplier Industrial Man

"The number of EV suppliers in China is so excessive that clients would push our
prices extremely low, leading to a very low profit margin," Jason Peng, a senior
manager at the company, said.

Li Yi, president of Nihon Sanhua Automobile Parts, the Japanese arm of
Zhejiang-based Sanhua Automotive Components, which produces integrated modules
and other cooling products for electric vehicles, also sees an opportunity to
expand in Japan.

"Toyota is now determined to catch up with international peers in terms of
electric vehicles. They are not used to incorporating external suppliers into
their system, but they have started to use our cooling plate," Li said.

While rival automakers have rushed to focus resources on pure electric vehicles,
Toyota has been far more cautious, arguing that EVs are just one of the many
types of vehicles that will play a role in decarbonizing the industry. Faced
with mounting criticism of its slow progress in rolling out electric models,
Toyota's new president, Koji Sato, has vowed to get serious about speeding up
development. The world's largest automaker has set a target of increasing its EV
sales to 1.5 million cars by 2026 and 3.5 million by 2030.

"If you look at Toyota's sales target, we do see a chance," said Li, adding the
company is also discussing future cooperation with other Japanese automakers.









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