Nidec's ¥40B writedown: the EV boom cooled before its equipment could sell

Nidec Corporation (日本電産), the world's largest manufacturer of precision electric motors, shocked investors on 23 October 2023 by slashing its full-year operating profit forecast by roughly 90%, from ¥150 billion to about ¥15 billion ($100 million). The drastic revision was driven by collapsing demand in China's electric-vehicle market, where Nidec had invested heavily to supply e-axle drive units to local automakers.

The company had spent the preceding three years building out capacity for EV components, expecting China's EV market to maintain the explosive growth rates of 2020–2022. Instead, a price war among Chinese EV makers, slowing consumer demand, and the phase-out of purchase subsidies led several automakers to cut production forecasts. Nidec's e-axle business, which it had touted as its next growth engine, was running at a fraction of capacity.

Nidec took an impairment loss of roughly ¥40 billion ($270 million) on its precision equipment and EV-component production lines. Founder and CEO Shigenobu Nagamori, who had built Nidec from a one-room startup into a ¥2 trillion company known for aggressive growth targets, acknowledged the company had overinvested. He described the writedown as 'the biggest failure' of his career.

The profit warning sent Nidec's stock price down 12% in a single day, erasing about ¥300 billion in market value. By early 2024, Nagamori was back as CEO, promising a leaner strategy focused on return on capital. The writedown was a rare public reversal for a company long celebrated as a Japanese industrial success story: even the most disciplined manufacturer could misjudge the timing of a technology transition.