New Hitachi Mobility Company Wants To Improve The World

Hitachi Astemo isn’t so much looking to save the world, but the company formed January 1 is looking to greatly improve it.

“Our vision is to make the world a better place,” said CEO Brice Koch in an interview conducted by email.

Hitachi Astemo was formed from the merger of Hitachi Automotive Systems with three former Honda affiliates: Nissin Kogyo, Keihin and Showa. Hitachi Ltd. owns a 66.6% share of the new auto supplier with Honda holding 33.4%.

First announced in October, 2019, Koch says the decision to combine the companies made sense since, from a research and development standpoint they were all basically pursuing the same technologies.

“In terms of business, the companies are very complimentary such that today they merged to form comprehensive business units in Astemo,” Koch further explained. “For example, Nissin fits largely into the former Hitachi Automotive Systems brakes business, Showa has formed our Two Wheel business.

He adds that by growing into a global footprint, the company is now closer to its customers with nearly 140 facilities in 27 countries.

Hitachi Ltd. owns a 66.6% share of Hitachi Astemo with Honda holding 33.4%.

Astemo is an acronym for Advanced Sustainable Technologies for Mobility—an apt description of the company’s mission, which is creating advanced mobility solutions in its core businesses of powertrain systems, advanced driver assistance systems and chassis systems for both automobiles and motorcycles, according to Koch.

How will that help make the world a better place? Koch says it’s all about pursuing what he terms a triple bottom line:

• Social contribution: Improve safety, comfort and quality of life with autonomous and advanced driver assistance systems and advanced chassis.
• Environmental contribution: Contribute to a greener world through efficient electrification technologies and products that improve emission reductions
• Economic contribution: Achieve approximately 2 trillion Japanese yen or about $1.8 billion in sales and approximately 15% EBITDA by fiscal year 2025.

In addition, Koch says the company has laid out three additional targets:

• Carbon neutral production lines by fiscal 2030
• Global leadership in electric motors and inverters with annual production targets of five million units for each by FY2025
• Generating 60 billion yen in cost synergies by FY2025 (about $550,000,000)

In its short life, Hitachi Astemo has already made considerable progress.  Its Chassis Division currently accounts for about 41% of global sales while the Powertrain & Safety Systems Division contributes 50% according to Koch.

In terms of products, Koch points to the development of inverters for electric vehicles with reduced loss to improve power savings as well as more compact sizes and higher output for easier installation, “boasting more than twice the output density of other companies.”

In 2019, before the company was officially former it launched the world’s first mass production of high-voltage (800V), high-output inverters for EVs. Its motors, which use advanced analysis technology, structural design, materials development, production technology, and motor control technology that the company has cultivated within the Hitachi Group, have more than 1.2 times the torque per magnet volume of its competitors, Koch said.

Aside from components, a key focus for Hitachi Astemo is developing software for vehicle electronic control units and and managing over the air software updates.

“As the scale of software development increases, it is becoming more and more important to ensure the efficiency and quality of software development,” said Koch. “To address this issue, we have developed and used a common software platform for the common portions of each product to improve development efficiency. Furthermore, by applying automation technology for development and verification, we can provide high quality software.”

Astemo is also applying advanced technologies it’s using for four-wheel vehicles to motorcycles. One example Koch points to is of leveraging four-wheel drive technology to two-wheel drive equipment is “utilizing of xEV motors and application of AD/ADAS technology to driver-assistance control of motorcycles.”

One electric vehicle component Hitachi Astemo isn’t touching, however, is the battery. Koch explained the parent company divested itself of its lithium-ion battery business in 2018 in favor of pursuing growth in advanced mobility solutions.

“The battery business is certainly an area for growth, however, it requires very heavy investments and was also becoming more heavily regulated as global competition in the automotive lithium-ion battery market has intensified,” Koch explained.

This early in Hitachi Astemo’s life financial comparisons are not yet valid, although since activities actually began before its official formation at the beginning of year, Koch was able to provide a hint as to the company’s early performance.

“I am pleased to say that we have demonstrated a strong resilience and also important successes in this very short time,” said Koch. “In our Q4 results—our first quarter as an integrated company—our OP margin was 8.2% and overall, the strong results brought us into the black for FY20.”

Looking ahead, Koch says the company will achieve its fiscal year 2025 financial targets of approximately 15% EBITDA and about 12% return on invested capital by strengthening its product portfolio, increasing market share, focusing on costs and leveraging scale and technologies to achieve top share for motors and inverters by FY2025.

It’s still too early to say Hitachi Astemo has, indeed, made the world a better place, but it intends to.