Nidec to manufacture electric drives in Mexico

Nidec is planning to build an electric axle factory in Mexico. The company currently produces electric axles in China and Europe and wants to manufacture them in Mexico in the future in view of an expected surge in demand in North America.

This was announced by Nidec CEO Shigenobu Nagamori to the Japanese business newspaper Nikkei. However, the company has not yet made a statement on the investment decision. According to the CEO, about 100 billion yen (697 million euros) will be invested in the Nidec plant in Mexico. Construction is planned to begin in or after the next financial year, which usually starts in April 2023 in Japan.

Nidec plans to expand its electric axle drive production capacity worldwide to 7 million units annually by March 2026. Seven plants, including five in China and two in Europe, will produce a total of 5.7 million electric axle drives, and the planned new plant in Mexico will produce part of the remaining 1.3 million units.

Nagamori reiterated to Nikkei that the company’s focus in this investment is to manufacture products in a region in order to sell them in that region. In other words, to carmakers who are converting their production to electric cars in their plants in Mexico, the USA or Canada. Since the aforementioned three countries are linked through the NAFTA free trade agreement, the electric drives produced in Mexico would be included in the North American value-added under the EV tax credit rules in the US.

Nidec CEO Nagamori did not yet name potential customers. In Europe, the Japanese manufacture electric drives in association with the Stellantis Group, which, also wants to electrify its US brands – so a connection already exists here. General Motors, on the other hand, relies on its own'”Ultium Drive’ units. Although GM will build two electric vehicle models in Mexico in the future, a partnership with Nidec seems rather unlikely.

The exact location of the planned factory in Mexico is also still open. The carmakers’ plants tend to be located in central Mexico or in the north towards the US border.

nikkei.com (Paywall) via reuters.com