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Chinese motor company to acquire a stake in local supplier to Tesla Motors

TAIPEI, Taiwan -- Reports indicate that China's Xinzhi Motor Co. (信質電機) intends secure a foothold in the vast local market by acquiring a stake in Taiwan's Fukuda Motor Co. (富田電機), an exclusive motor supplier to U.S.-based electric carmaker Tesla Motors.

Xinzhi Motor Co. intends to spend a total of NT$346 million in acquiring a 20-percent stake, or 4.79 million shares in Fukuda Motor Co., at no more than NT$72 per share. Following the deal, Xinzhi is expected to become Fukuda's largest shareholder.

Based in Taichung's Shengang District (神岡), Fukuda is currently an exclusive supplier of vital motor parts to variety of Tesla's electric cars including the Roadster performance vehicle and the Model X sports utility vehicle. The company's electric motor division last year supplied modules for 26,000 Tesla cars, generating net income of NT$110 million, on revenues of NT$910 million. The company is poised to provide motor parts for an additional 42,000 Tesla vehicles, according to reports.

In addition, industry commentators stated that the move represents a strategic alliance between Fukuda's five founding family members surnamed Lin (林), who each hold a 16-percent stake in the company, and a Chinese company in vying to tap into expected growth in the market for electric vehicles across the strait. Commentators stated that Fukuda may begin sourcing electric motor rotor parts from Xhinzi when quality control standards conform to its clients' requirements at lower costs than its Taiwan-based operations.

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