Tesla’s oldest motor supplier Fukuta is scaling up

Source: FukutaCaption Source: Fukuta

In Tongluo science park, located in the middle of Taiwan lies the newly built factory of Fukuta that will become the main production spot for electric vehicle motor parts.

About half of the 33-year company lifespan since Gordan Chang (張金鋒) founded Fukuta Electric & Machinery Co. (富田電機) is tied with Tesla Inc., tracing back to producing motors for Roadmaster, the first Tesla electric vehicles. Their main line of business includes manufacturing motors and generators.

The electric vehicle market is expanding. Fukuta currently produces electrical powertrain systems at 200 thousand units a year. Future orders from Japanese automakers are estimated to generate approximately US$10~14 million additional revenue.

How did Fukuta, once a small factory expand into becoming one of the main suppliers of electric vehicle motors and later stir up interest of Toyota?

Specializing in flexibility

Gordan Chang, once a technician, founded Fukuta in 1988 to produce small batches of customized industrial motors.

Limited by the production scale in comparison to some major industrial motor manufacturers at the time, such as TECO (東元) or Tatung (大同), their production often ranges across seven different specifications out of merely fifteen motors.

This was favorable for Tesla, which was just starting from the ground up, needing only a minimal scale of components but required the flexibility to quickly adapt to customized changes.

Fukuta had never got in touch with any automakers before the US startup Tesla came knocking on the door in 2005.

Gordan said challenges began when Tesla orders came in asking for motor specifications with 180 kW power but demanding a vast 80 percent shrinkage of weight with what they normally produce.

But his ambitions overcame the challenges and with communications back and forth, the first motor was made two years later.

More hurdles

Fast forward, the two parties faced the biggest hurdles in 2014 when Model X couldn’t be put to market as scheduled due to defective hydraulic systems.

Tesla was short of capital resulting in Fukuta risking overdue payments and stocks of motor supplies totalling four times the company’s total capital at the time.

When Model X finally made its way to market the next year, Fukuta’s yearly revenue surpassed US$1 billion for the first time and Tesla became their largest client.

When an international carmaker manager asked Gordan about Fukuta’s competitiveness, he replied it’s the vertical integration of Taiwan suppliers, all the way from raw materials to precision finishing that made it happen.

“China Steel’s electric steel sheets, Taya’s copper wire, Hota’s gear set and CMP’s precision finishing,” he named a few old partner suppliers, emphasizing the electrical powertrain systems being a collective production. “Components are the core strength of Taiwan manufacturing and when integrated can be unbeatable.”

Japanese carmaker

Fukuta became well-known after years of cooperation with Tesla, leading other carmakers to come approaching.

It was revealed that in March 2019 the Toyota Group company Tsusho bought an undisclosed stake of Fukuta, aiming to provide motor core parts to the Chinese market according to news source.

Gordan further predicted the car industry in 2030 to consist of 20~25% electric vehicles, each carrying not just a single-engine as fuel cars do but dual-motors all-wheel drive performance, greatly magnifying the power system market.

“Imagine 100 million cars are being produced in a year. It would be a massive deal if we could manage 2 million of them.” Gordan said revenue is likely to increase by 50% this year, mainly driven by the electric vehicle market.

Scaling up

Tesla Model 3 was the best-selling electric vehicle in 2020, but Fukuta had lacked production scale to keep up with production. Now they want to expand its production capacity to avoid missing the next big opportunity.

The company recently spent over roughly US$71 million acquiring a space in Tongluo science park to set up larger factories and purchased testing pieces of equipment from Japan and Germany, costing over US$10~20 million each, now waiting to be installed into the assembly line.

The expenditures of the newly constructed electric vehicle motor production line at the Tongluo site mounts to roughly US$12 million, a good 15 times more than producing for industrial motors, demonstrating the company’s ambition to seize business opportunities.

The Taiwanese government is planning for all domestic buses, roughly 12~13 thousand units to be electrified by 2030. Gordan expresses his confidence in supporting the implementation and results to take place in two years.

Fukuta is adjusting its strategy in scaling up productions. “You must scale up to get orders,” he said. This is just the beginning of a new era for electric vehicles and Fukuta is gearing up to match.

 

Source: CNA, Business today, China Times, Wealth Magazine (in Mandarin)

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