Electric Cars Push Japan Engine Parts Makers to Crisis Mode

From Bloomberg:

Auto supplier NTN Corp. knew its gasoline engine parts wouldn’t be needed in Nissan Motor Co.’s Leaf electric car. So the component maker’s engineers built a mock model to test a motor-and-brake system it developed for electric vehicles.

“If old-guard companies like us just continue along the same beaten path, things will become difficult,” Chairman Yasunobu Suzuki said. “I told our engineers to try everything.”

As Nissan and General Motors Co. prepare to introduce battery-powered cars next year, traditional auto suppliers like Osaka-based NTN are trying to adapt by creating new lines of business. Engine components account for as much as 40 percent of a typical car’s total parts, so some suppliers are scrambling to come up with new products, said Takeshi Miyao, a Tokyo-based analyst for car consultant Carnorama.

While internal-combustion engines currently power more than 99 percent of cars built globally, their share can only fall as electric cars enter the market, Miyao said. That will intensify price competition and lower profits for manufacturers.

“If you’re a parts maker that can’t expand market share, then you can’t grow without entering new businesses,” he said.

‘Crisis-Like Situation’>>>MORE