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Cheap Moto Electric Vehicles are killing Japan's primary industry
- Aug 28, 2018 -

Tetsuya Kimura is now worried.

The company he runs, which makes engine parts, has been caught in an endless cycle of cost cuts to stay competitive.

Akio toyoda, President of Toyota motor corp., his company's biggest customer, warned last fall that a once-in-100-year shake-up would threaten the survival of the traditional auto industry.

 

While the risk of a trade war emanating from trump looms, Mr. Toyoda isn't worried about it. His real concern is Shared vehicles, cheap Moto Electric Vehicles and driverless vehicles -- the forces that threaten the transformation of the traditional auto industry that relies on the internal combustion engine.

 

The Japanese government last month put pressure on automakers to stop making conventional cars by 2050.

It's a long time coming, but China, the world's largest car market, aims to have 20 percent of all cheap Moto Electric Vehicles sold by 2025.

  

The problem in aichi prefecture, home to hundreds of suppliers, including Toyota and Asahi Tekko Co., is that there are about a third fewer parts for cheap Moto Electric Vehicles than there are today for fuel vehicles.

Obviously, you can't find spark plugs, pistons, camshafts, fuel pumps, injectors, catalytic converters, etc.

For the county's 310,000 autoworkers, the restructuring means painful layoffs, and changes in the auto industry have far-reaching implications for Japan's industrial hub.

 

"" such changes cover all regions." "

Rob Carnell, chief asia-pacific economist at ING Bank NV in Singapore, said "" hair salons, small local mom-and-pop shops, and places where all car workers will spend money have also been hit." "

 

That is a slow threat, since electric cars accounted for just 1% of global car sales last year.

Most analysts say the process of phasing out fuel cars will be a very long one.

The success of Toyota's prius hybrid has allowed aichi to maintain its status quo for longer, as Toyota has been slower to transform pure cheap Moto Electric Vehicles than other auto makers.

  

But it won't be long, and Toyota says it will start adding more than 10 all-electric cars to its lineup by early 2020.

At the same time, Toyota is developing a solid-state battery to strengthen its competitiveness in pure electric.

Top Japanese suppliers Denso corp. and Aishin Seiki Co., which are part-owned by Toyota and have billions of dollars in revenue, are ramping up their investments to keep up.

 

"As with all technological change, there are survivors and there are weepers."

"Those that survive need to have the ability to develop key components, but if you make mufflers that fit on the tailpipe, obviously you're not going to be one of the winners," says Janet Lewis, an industry analyst at Macquarie in Tokyo.

 

A visit to kimura's factory in binan, an hour and a half from Toyota's headquarters, makes it easy to see why change is so difficult.

It's a relatively large company with 500 employees, but visiting here is like going back in time.

Asahi has been working on the same engine and transmission parts for decades, and some workers are still working on machinery purchased in 1971.

"If you ignore the computer, you might even think it's in showa's time," kimura said.

Akihiro era at the mouth of kimura, whose reign ended in 1989.

  

Mr. Kimura, 51, a former Toyota manager, began overhauling the company five years ago.

He added more software and sensors to the production line to reduce waste and also laid off some employees.

But his biggest innovation was the creation of iSmart Technologies, a consultancy that teaches other manufacturers how to streamline processes.

 

ISmart Technologies' office is on the other side of the parking lot, within walking distance, but it's a different place.

It's a silicon valley-style open space with sports equipment in the corner.

Some of the 12 employees held meetings while moving around.

 

Kimura aims to end up with as much revenue from information services as from car parts.

"" if electric cars and Shared vehicles really develop, a lot of our business will disappear," "he said.

At the bottom of the supply chain, fewer than 30 people are employed, and they have less money to invest in new businesses and technologies.

  

Last year, when Toyota's profits were at a record high, 40% of the small manufacturers in Toyota city saw their revenues fall, according to a local government survey. Only 15% of suppliers said they had staff working on research and development.

 

Even Tetsuo Agata, the director of Jtekt Corp., a big maker of power-steering parts and drive shafts partly owned by Toyota, is upset.

"We don't know how to respond to new challenges."

"Everyone is upset," he said in an interview in January.

 

Although there are currently no economist formally studied electric car revolution impact in aichi prefecture, but Germany's Fraunhofer Institute for industrial Engineering (Fraunhofer Institute for Industrual Engineering), the analysis of the German car industry has suggested if only 25% of all cars are electric cars, so will lose 9% of the German auto jobs, it is increase in electric cars has created jobs.

 

Similarly, the German industry, where cars originated, has begun to worry about the future of the traditional industry.

The auto industry currently provides 840,000 jobs in Germany, of which 210,000 are related to powertrain manufacturing.

 

Although the rise of new energy vehicles will create new jobs in areas such as automotive electronics and batteries, the need for people to make conventional fuel engines and gearboxes will shrink significantly and the number of workers on assembly lines will shrink, the IG Metall union has warned.

   

Bernd Osterloh, the head of the Volkswagen group's union, gives an important set of figures:

 

· the number of parts of the electric vehicle powertrain is only one-sixth that of the fuel engine, which means that the manufacturing time of the electric vehicle powertrain will be shortened and the number of associated suppliers will also change;

 

· the final assembly time of cheap Moto Electric Vehicles is 30% less than the current fuel powered passenger vehicles;

 

· battery manufacturing plants for cheap Moto Electric Vehicles require only a fifth of the labor required by fuel engine manufacturing plants.

 

Bosch is the world's largest automotive component supplier and the world's largest supplier of diesel engine systems.

Bosch has set up a diesel car business in "economically weak areas" from Saarland to Franconia in Bavaria.

In the wake of the Volkswagen emissions scandal, the decline of the diesel business has become untenable.

As many as 20,000 related jobs in Germany will be hit, Mr Hatwig said.

 

Joerg Hofmann, President of the IG Metal union, stressed: "politics and industry need to plan now to get this transition under control."

In its view, companies need to embark on job-retention programmes to ensure there are still enough qualified workers for new electrification technologies, and politicians need a comprehensive industrial and human resources policy.

 

Last year, another study funded by carmakers suggested that a ban on the internal combustion engine being negotiated by the German parliament would endanger half the industry's workforce.

Lawmakers are currently eyeing a 2030 deadline, but have yet to reach a final conclusion.

 

While it may not be as much as the 2017 study suggests, the number of unemployed in aichi prefecture will still be huge, according to Martin Schulz, an economist at Tokyo's Fujitsu Research Institute.

He says auto parts makers now face the same situation as the Swiss watch industry did in the 1970s and 1980s, when the gears and springs of most watches were replaced by electronic components, which led to hundreds of traditional companies going bankrupt and tens of thousands of jobs.

  

That's why, back in aichi prefecture, kimura developed new businesses.

It was only a matter of time before Toyota began ordering fewer of his engine parts.

"Maybe three years, maybe five years, I'm not sure."

"But it's a matter of time," he said.

 

The grand trend of electrification is irreversible, and the pain of change will be absorbed into every nerve terminal of the supply chain, and the kimura will eventually find a better way for themselves, otherwise they will just disappear under the rolling track of the automobile industry.