Taiwan has earned itself a reputation as a major car component exporter over the last decade. Chu-Jui Wu considers how Asia’s ‘Silicon Island’ is adapting its manufacturing capability into the EV era.

Taiwan’s component export industry nets the Asian island state around £3.6 billion per year, according to recent figures from the Taiwan Transportation Vehicle Manufacturer Association. Over four-fifths of the island’s output (81%) is destined for foreign markets, with China topping the list. 

Recent legislation promises to boost the export sector even more. Under the Economic Cooperation Framework Agreement, duties on car component exports to China dropped from a high of 10% to 5%. The same agreement saw some duties abolished altogether in 2011.

China, the world largest automobile market, has been outsourcing car components to Taiwan for many years. More recently, the US and several European countries have begun to follow suit. In terms of EV, Taiwan is building itself a reputation as a major battery manufacturer, competing with China, Japan and South Korea for a slice of this rapidly expanding sector.

Taiwan first began investing in battery technology more than a decade ago. Leading the pack is EV battery manufacturer E-one Moli Energy, which specialises in power cells and high-energy cells. Established in 1998, the firm counts Ford among its customers. E-One’s battery technology can also be found in BMW’s Mini E.

Another leading light in Taiwan’s battery manufacturing industry is Foxconn. Originating from the IT sector, Foxconn was one of the early suppliers to Apple. In July last year, the company set up a subsidiary, UER Technology, devoted to the production of lithium battery cells and battery packages.

Taiwan’s consumer electronic product battery market grossed around £781 million in 2010, according to Hseuh-Lung Lu, executive secretary of Taiwan Battery Association. Lu expects the EV battery sector to surpass that figure by 2013, hitting an estimated £2.35 billion by the year end.

Another Taiwanese component manufacturer to watch is Fukuta Electric & Mech. Fukuta supplies the electric motor that supports the Tesla Roadster’s 4-second 0-60 mph electric drive train. Set up in 1988, the company started out producing 10HP or smaller 3-phase induction motors. The client list for Fukuta’s electric motors also includes BMW and Luxgen EV.

The China Factor
Taiwan’s position as a supplier to China’s burgeoning EV market is where its future potential lies. Played right, Taiwan’s component manufacturers could see Chinese exports swell hugely in the coming years.

The Chinese government is pushing the EV manufacturing and infrastructure aggressively. Government policy has set the target of one in ten new cars being ‘new energy vehicles’ in the year ahead.

To date, Chinese automakers have preferred lead-acid batteries to the more advanced and lightweight lithium-ion alternative. This is due in no small part to the ease of battery-swapping for lead-acid batteries, a popular strategy for Chinese EV drivers, particularly in the e-scooter sector.

The Economic Cooperation Framework Agreement between Taiwan and China affords the island state a considerable head start when it comes to gaining market entry in China.

The official word from Beijing indicates that Asia’s dominant economic powerhouse hopes to produce as many as 30,000 EVs in 2012. If successful, that would position China as far and away the largest EV market it in the world.

Taiwan’s manufacturers are not blind to the opportunities ahead. The country’s battery producers are all turning their attentions to creating products for the Chinese market. The key will be their ability to develop and consistently produce high energy density, long-life cycle and high safety-oriented batteries. Crack that and Taiwan could become a major force in the EV supply chain in the very near future.