TDK Will Invest US$5 Billion into EV Battery Production and Development of Clean Energy Technologies

published: 2021-02-11 9:30 | editor: | category: News

TDK, which is among the major Japanese electronics manufacturers, has just announced that it will be investing US$5 billion (or 520 billion yen) into EV battery production and development of clean energy technologies over the next three years. The main reason behind this move is the rapid growth of the global EV market in terms of scale and profitability. Seeing that the electrification of vehicles is taking off, TDK has decided to raise its production capacity for EV batteries and automotive electronics. The company wants to establish a strong presence in the EV and renewable energy markets.

A battery-electric powertrain is wholly different from a traditional powertrain based on an internal combustion engine with respect to energy source, principle of operation, and design. Likewise, the components of an EV are mostly different from the components of a gasoline vehicle. Hence, the trend of electrification will bring about a structural change in the automotive supply chain.

A report from Nikkei Asia on TDK’s US$5 billion initiative states that an EV has two-thirds fewer components than a gasoline vehicle. For Japanese carmakers, offering more battery-electric models will thus entail greater outsourcing for components and assembly services. The transition to the battery-electric powertrain will also completely change the supply-chain model of the Japanese automotive industry. Traditionally, Japanese carmakers procure components from affiliated part suppliers. However, there is now a window of opportunity for domestic suppliers of electronic components. The growth of the global EV market puts them in a more advantageous spot when it comes to developing businesses related to automotive applications.

Shigenao Ishiguro, president of TDK, told Nikkei Asia that rechargeable batteries, which represent a much more efficient and cleaner energy technology, is already a core business of his company. Moreover, TDK’s battery offerings will diversify as countries around the world are making the shift away from fossil fuels and toward renewable energies. TDK is currently one of the major suppliers of Li-ion batteries for smartphones. However, the US$5 billion investment plan indicates a reorientation of its strategic focus from smartphone batteries to batteries for EVs and energy storage. According to reporting by media outlets, TDK will spend the US$5 billion mainly on production equipment in the period from 2021 to 2023.

Ishiguro also pointed out that the market for smartphone batteries has pretty much reach the point of saturation. To grow its battery business further, TDK will have to expand into EVs and other market segments that have the demand for batteries with higher capacities.

Besides four-wheeled electric cars, TDK will also raise production capacity for batteries used in e-bikes and e-scooters, both of which are gaining popularity in China and Southeast Asia. Additionally, the company will ramp up production for batteries used in residential energy storage systems, components for the EV charging structure, and other EV components.

 (Image credit: TDK.)

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