Taiwan: emerging EV supply hub

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.

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Taiwan: Asia’s silicon island

The ‘silicon island’ of Taiwan has the know-how to become a regional leader in electric transportation, but its domestic industry is accelerating slower than many hoped.

Taiwan is synonymous with Information Technology. Acer, Asus and HTC are just some of the multinational IT brands to have originated from the East Asian island state. Microchip and semiconductor manufacturers such as Foxconn, United Microelectronic and Taiwan Semiconductor Manufacturing also carry the famous ‘Made in Taiwan’ title.

With this strong IT background, Taiwan has been widely predicted as a hub for electric vehicle (EV) development. Such predictions, however, appear premature.

At present, Taiwan’s EV status could be said to be in ‘demonstration mode’. Much was made, for example, of the 20 Luxgen electric vehicles that served as the “green shuttle” for last year’s Taipei International Flora Expo.

Yet options for Taiwanese EV consumers remain extremely limited. The government has yet to make clear preliminary measures on key issues such as tax rebates or standardisation. EV infrastructure has also been slow to take off.

Electric scooters mark the most probable area for early entry within the island state’s nascent EV market. However, sales of electric scooters last year only reached 5,193. As a percentage of total scooter sales, which hit nearly 14 million in 2010, it’s clearly early days for two-wheelers as well.

The Luxgen Leap

Taiwan is not without its domestic EV pioneers, however. One of the first and most important local players is Yulon Group. The group is a classic Asian conglomeration, including automobile R&D and manufacturing alongside textiles, real estate and a range of other business divisions.

As the holding company of CMC Motor, Nissan Taiwan and Yulon GM, Yulon Group is the force behind the home-grown Luxgen models. The company began work on its first EV in 2007, releasing the Luxgen7 MPV two years later.

“Building a Taiwanese brand with premium quality has always been my dream . . . Taiwan can be a leader in next automotive trend”, Yulon’s chief executive K.T. Yen tells EV Update.

Built with cooperation from AC Propulsion, the Luxgen model represents Taiwan’s first foray into full EV manufacturing. The Luxgen7 MPV is equipped with a 150kW electric motor with 220N-m torque, similar to the Tesla Roadster. The motor is provided by Fukuta, a Taiwan-based electric motor manufacturer and supplier to Tesla Motors. With a battery capacity of 40kWh, the prototype has 186 miles range per charge.

As well as the 2010 Taipei International Flora Expo, the Luxgen serves as the ‘green shuttle’ for the Eco Taiwan Expo 2010. Yulon’s battery-powered EV is the first legal EV with special-made EV license plate in Taiwan.

Yulon’s subsidiary companies are also busy. Recently Japanese auto maker Mitsubishi, the long-term business partner of CMC, launched a demonstration shuttle service for the Taiwan High Speed Railway.

The joint project provides Mitsubishi’s all-electric i-MiEV as a transport solution to Hsinchu Station and nine other areas. In total, the three-year project is expected to involve 3,000 vehicles, making it by far the most ambitious pilot currently underway.

The IT factor

Where Taiwan’s EV industry really promises to come into its own is the application of its IT knowledge to the automobile industry.

Again, Yulon provides an early example. Smart phone brand, HTC, has teamed up with the company’s subsidiary Luxgen Motors as a technology partner and an investor.

In cooperation with HAITECH, one of the automotive technology companies within the Yulon Group, HTC has started developing an in-car multi-media control system called Think+. As HTC’s first venture into the EV field, Think+ has emerged as a key feature of the Luxgen range of EVs.

Foreign manufacturers are beginning to draw on Taiwan’s technological expertise for applications in the EV market too. Most of AC Propulsion’s components, for example, originate in Taiwan.

“We helped Yulon to develop batteries and the whole vehicle integration and they’re building the drive system and batteries in Taiwan for Luxgen EV under the license from AC Propulsion”, says Tom Cage, chief executive of AC Propulsion.

According to Taiwanese industry expert and Auto Online chief editor, Kevin Lo, the quality of Taiwanese EV products stand it apart from neighbouring mainland China. He predicts a 15% premium for EVs and associated equipment made in the island state as a result.

“EV manufacturers in Taiwan have already set up the highest standard for electric motors, batteries and connectors ”, Lo concludes.

Taiwan may have disappointed optimistic predictions of early EV growth, but commentators remain confident of its long-term prospects. Its expertise in the fields of IT, battery technology and automobile electronic components all bode well.