Tesla, Toyota Motors help obscure Japan supplier thrive

gulf-times.com -- Jul 27
Deep in the electric-vehicle industry’s supply chain is a little-known Japanese manufacturer that makes a seemingly mundane, but essential, device: Coil-winding machines.

If the motor is the heart of an EV, then coils in turn are the heart of the electric motor. Odawara Engineering Co, founded 70 years ago as a supplier for appliance makers, is an expert in the making the dense loops of wire that go into those motors. Tesla Inc, manufacturer of the Model S and Model 3 sedans and most recently the world’s most-valuable automaker, is one of its biggest customers.

Although the coronavirus pandemic has depressed global auto sales, BloombergNEF predicts that economies will speed up adoption of EVs as some countries choose to bolster funding for low-emission cars and infrastructure. The global market for coil-winding machines is projected to expand at 10% annually and will reach $1.3bn in 2024, according to Global Info Research.

A fully automated winding and assembling line for a refrigerator motor.

“We have to keep making our machines better,” said Masahiko Hoshina, vice president at Odawara Engineering. “Our clients can’t win if they can’t differentiate their products.”

Electromagnetic coils interact with magnets to turn electric energy into motion, the basic principle behind the motors that power everything from drills to commuter trains. The shares of Odawara Engineering jumped 21%.

Located in Odawara, a city about 90 kilometres (56 miles) west of Tokyo, the company’s prime business during Japan’s post-war economic boom was building coil-winding machines for makers of refrigerators and air conditioners. Apart from Tesla, the company also counts Toyota Motor Corpand Nissan Motor Co among its customers.

In 2018, Tesla made up 12% of Odawara Engineering’s sales, but in 2019 that probably slipped below 10%, the threshold for reporting such figures.

Robust demand for Odawara Engineering’s machines means it will probably keep its outlook intact for the current year. The company maintained its forecast for operating profit of ¥700mn ($6.5mn) and revenue of ¥14.5bn intact when it reported results in May, as the Covid-19 outbreak shuttered economies across the globe.

- gulf-times.com