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Toyota Affiliate Aisin Developing Rare Earth-Less Motor For Electric Cars

Thursday, Jan 20, 2011

Bloomberg Jan 19---A Toyota Motor Corp. supplier is developing motors for electric and hybrid cars that don’t use rare earths to help cut reliance on materials from China and enter a new line of business.

Aisin Seiki Co., Japan’s biggest maker of transmissions, aims to sell the motor to several carmakers, not just Toyota, within five years, President Fumio Fujimori said in an interview in Kariya, Aichi prefecture, yesterday. Aisin doesn’t currently produce motors and wants to add a new product in case the industry shifts to electric cars without transmissions, he said.

“Drivetrain components make up almost half of our business,” Fujimori said. “In the long run, demand for transmissions and engine parts may decline, so motors are becoming an important keyword.”

The motor could help cut carmakers’ dependence on rare- earth materials from China, which controls more than 90 percent of the market for the metals. China’s government cut export quotas for the first half of 2011 by 35 percent last month. That follows a 72 percent reduction in the second half of 2010, causing the price of some of the metals to more than double.

Stable Supply

“Taking rare earths out of the equation will make Aisin’s supply of motors stable, which will be attractive to carmakers,” said Masatoshi Nishimoto, an analyst a consulting company IHS Automotive in Tokyo. Still, given research and depreciation costs, “Aisin will have to secure a significant scale of production to make a return on the investment.”

Aisin rose 2.3 percent to close at 3,120 yen in Tokyo trading. The shares have risen 8.6 percent in 2011.

Aisin won’t disclose the materials that would replace rare- earth materials including neodymium and dysprosium, said Masayuki Toyama, a spokesman for the company.

Japan’s government-affiliated New Energy and Industrial Technology Development Organization and Hokkaido University have jointly developed a motor that uses ferrite, an iron-based material, instead of rare-earth materials, NEDO said in September.

“Carmakers may be able to sell cars with motors that don’t use rare earth in as little as two or three years, given where we are in the development process,” said Professor Satoshi Ogasawara of Hokkaido University.

‘Multiple Customers’

Aisin’s research, being conducted jointly with its research unit IMRA Europe in Brighton, England, is separate from Toyota’s own in-house development of an induction motor that doesn’t need rare-earth minerals, Toyama said.

“If it’s a good product, we really want to push it to multiple customers,” Fujimori said.

Aisin is also seeking new business in China and is in talks with about 10 local carmakers to supply transmissions, door locks and engine parts, Fujimori said. He declined to speculate on when any agreements would be reached.

China, the world’s largest car market, is a priority for the company, he said. Vehicle sales in the country surged 32 percent last year to 18 million and may reach 20 million in 2011, Booz & Co. and Nomura Holdings Inc. forecast.

While sales to Toyota and its affiliates made up 68 percent of Aisin’s revenue last fiscal year, that proportion is falling as it sells more to customers including Volkswagen AG and Suzuki Motor Corp. Aisin is 22 percent owned by Toyota, according to data compiled by Bloomberg.

A weaker-than-estimated yen and potentially better-than- expected sales in Japan may help the company exceed its full- year operating profit forecast of 140 billion yen ($1.7 billion), Fujimori said. The company may post profit of 150 billion yen for the year ending in March, according to the average of 15 analyst estimates compiled by Bloomberg.

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