Japanese electric motor manufacturer Nidec Corporation has agreed to set up a new joint venture company with GAC Components Company, a subsidiary of China's Guangzhou Automobile Group, for the production of drive motors for electric vehicles.

This will be Nidec's third major electric motor investment in China in the last two years, following the announcement of two new plants in the provinces of Zhejiang and Dalian.

The Japanese company is positioning itself to help fulfill the anticipated strong growth in global demand for electric and hybrid vehicles, from which it expects to generate annual revenue of JPY700bn-JPY1 trillion (US$6.5bn-$9.3bn) by the financial year ending 31 March 2021. 

Nidec said its new partner manufactures automobile interior trim and electrical components mainly for Guangzhou Automobile Group, the sixth-largest vehicle manufacturer in China.

The new joint venture company, Guangzhou Nidec Auto Drive System Company, will be capitalised at CNY600m (US$86m) with Nidec controlling 51% of the equity and GAC Components the remaining 49%.

Nidec plans to hire local engineers in China to help speed up product design and development while using Guangzhou Automobile Group's local purchasing capabilities to help reduce sourcing costs.