Japan’s Nidec to unwind China EV axle venture amid rising Tokyo-Beijing tensions – Firstpost

Japan’s Nidec is preparing to dissolve its electric vehicle axle joint venture with China’s Guangzhou Automobile Group, marking a significant strategic retreat from a business once viewed as central to the company’s electric mobility ambitions, Nikkei reported on Monday.

The move comes as brutal competition in China’s EV market collides with rising geopolitical tensions between Tokyo and Beijing, prompting Japanese manufacturers to reassess exposure to Chinese supply chains and technology partnerships.

Nidec President and CEO Mitsuya Kishida told Nikkei that the company intends to exit the e-axle business, describing the once-promising sector as a “red ocean” — an industry crowded by intense competition and shrinking profitability.

“We want to withdraw from the e-axle business, which has become a red ocean,” Kishida told Nikkei.

The company has already begun discussions with Guangzhou Automobile Group, also known as GAC, regarding the dissolution of their Chinese joint venture. Nidec also plans to unwind a separate European e-axle partnership with automaker Stellantis, though talks with the European group have yet to begin.

A costly EV bet turns sour

E-axles — integrated systems combining electric motors, inverters and reduction gears — are considered a core component of electric vehicles and were once a flagship growth area for Nidec founder Shigenobu Nagamori.

Expecting rapid global EV adoption, Nidec spent years building its automotive electrification business through acquisitions and aggressive expansion.

The company acquired a Honda electronics control subsidiary in 2014 and later bought Omron Corporation’s automotive electric business in 2019 for about 100 billion yen.

However, the economics of the business deteriorated sharply as Chinese EV makers unleashed an aggressive price war that squeezed margins across the global supply chain.

Nidec reported losses of 87.7 billion yen in its e-axle division in the fiscal half through September, including impairment charges and provisions for contract losses.

The withdrawal underscores the growing difficulty foreign suppliers face competing in China’s rapidly consolidating EV market, where domestic manufacturers benefit from scale, state support and tighter integration across battery and component supply chains.

Security tensions deepen

Japanese media reports over the weekend said Tokyo’s upcoming annual defence white paper would raise concerns over China’s expanding military activities in the Pacific and around Taiwan.

According to draft excerpts cited by local media, the report argues that challenges posed by China should be addressed through “comprehensive national power” and stronger cooperation with allies and “like-minded countries.”

The draft reportedly refers to the simultaneous deployment of two Chinese aircraft carriers in the Pacific last year and alleged close encounters involving Chinese and Japanese military aircraft.

Beijing has rejected those accusations, saying its military drills were routine operations conducted in international waters and accusing Japan of deliberately exaggerating the “China threat” narrative.

Chinese officials and analysts have argued that Tokyo is using regional security concerns to justify higher defence spending, stronger offensive capabilities and a gradual erosion of post-war pacifist constraints.

The rising tensions are increasingly influencing corporate strategy across Asia, particularly in industries tied to advanced technology and strategic manufacturing.