Japan’s Mitsubishi Electric and Aisin plan to set up a new company to produce electric components for EV and HV. With the rise of Chinese enterprises, the price of EV is getting cheaper and cheaper, and reducing the cost of components is becoming increasingly important. Other Japanese companies are also restructuring their auto parts businesses…

Japan’s Mitsubishi Electric and Aisin plan to establish a new company to produce electric components for pure electric vehicles (EV) and hybrid vehicles (HV). With the rise of Chinese companies, the price of pure electric vehicles is becoming cheaper and cheaper, so reducing the cost of components is becoming increasingly important. Japanese electronics companies and auto parts companies will join hands to improve their competitiveness.

Mitsubishi Electric and Aisin will form a joint venture for the electrification parts business. Mitsubishi Electric is responsible for more than half of the investment, with Aisin holding the rest. The new company will develop and produce components needed for electrification, such as inverters that fine-tune motor speed and improve energy-saving performance.

5437-1119 By focusing on their own areas of expertise, they can also improve the efficiency of research and development. Focusing on the transition from gasoline vehicles to pure electric vehicles, the two companies collaborate to expand scale and improve efficiency.

Both sides commented on the morning of May 24, with Mitsubishi Electric saying that “regarding the electrification business, it is exploring cooperation with quality partners with technical synergies, and it is indeed negotiating with Aisin,” while Aisin said that it is “negotiating with Mitsubishi Electric to set up a new company.”

Mitsubishi Electric’s automotive equipment business, with revenue of 944.1 billion yen in fiscal year 2023 (ending March 2024), is involved in electric power steering components for steering wheel operation and advanced driver assistance systems (ADAS). The company will withdraw and shrink its business of automotive navigation systems and fuel injection devices for gasoline engines, and focus its operating resources on products related to electric vehicles.

The company will spin off its automotive equipment business in December 2023 to form “Mitsubishi Electric Mobility”, which will start operations in April 2024. This time, parts of Mitsubishi Electric Mobility will be transferred to the new company. In order to facilitate cooperation with external enterprises, the company will be separated from the original company.

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Aisin will strengthen strategic cooperation with other companies (Shanghai Auto Show 2023)

Aisin is a Toyota component manufacturer involved in powertrain (drive unit), brakes and body. The operating income of fiscal year 2023 (as of March of fiscal year 2024) was 4.9095 trillion yen, ranking second only to Denso in the domestic auto parts industry.

Although Aisin has the world’s largest market share in the automatic transmission (AT) segment, its main business, demand will inevitably decrease if pure electric vehicles become 5437-1119 widespread. Identifying new growth areas is a priority, and the company has previously said it will strengthen strategic partnerships with other companies.

The automotive industry faces changes in response to technologies such as electrification and autonomous driving, known as “CASE.” In order to cope with new technologies and improve competitiveness, large investments in research and development are needed. Honda plans to invest 10 trillion yen in pure electric vehicles and software by 2030.

On the other hand, in China, the main market for pure electric vehicles, local companies are rising. Due to overproduction, price competition has become increasingly fierce, and the impact has also spread to Japanese parts manufacturers. Nidec will temporarily scale back its components business in China in an effort to improve profits as profits for its E-Axle drive for pure electric vehicles deteriorate.

Japan’s big electronics companies have been shifting away from consumer businesses such as home appliances, where price competition is fierce with overseas rivals, and toward business-to-business businesses such as automobiles and IT. However, the automotive industry presents an industrial structure with vehicle manufacturers as the apex, and the requirements for cost reduction and quality of suppliers are particularly strict.

Against the backdrop of huge changes in the business environment such as the popularity of pure electric vehicles, the restructuring trend of other companies besides Mitsubishi Electric is also strengthening. In 2021, Hitachi Manufacturing merged its auto parts subsidiary with three parts companies owned by Taka to form Hitachi Astemo. Panasonic sold its auto parts business to a U.S. investment fund to form a joint holding company with a 20 percent stake.