China's Electric Vehicle Boom Fuels Surge in Japanese Machine Tool Orders
China's new energy vehicles are increasingly dominating new car sales, prompting both automakers and parts manufacturers to ramp up investments in related machine tool facilities.
Gasgoo :According to foreign media reports, the latest data from the Japan Machine Tool Builders' Association shows that from January to July this year, China's orders for automotive machine tools from Japanese companies totaled 78.1 billion yen (approximately US$527 million). The annual order volume is expected to reach a new high.
As competition among China's new energy vehicle manufacturers intensifies, Japanese machine tool manufacturers are benefiting from a growing number of orders for automotive-related equipment.
The 2022 electric vehicle boom had driven a surge in demand for automotive machine tools, but as market focus shifted back to internal combustion engine vehicles, order growth for automotive machine tools gradually slowed. In 2024, total domestic and international orders for automotive machine tools in Japan declined 3% year-on-year to ¥324.5 billion yen. Regionally, domestic orders for automotive machine tools received by Japanese companies fell 10% to ¥91 billion yen. Orders from Europe dropped 27% to ¥25.2 billion yen, while those from North America decreased 23% to ¥41.4 billion yen. In contrast, orders from China surpassed domestic Japanese orders, growing 16% year-on-year to ¥106.8 billion yen.
China's new energy vehicles are gaining an increasingly larger share of new car sales, prompting both automakers and parts manufacturers to ramp up investments in related facilities. Despite facing competition from domestic Chinese companies, Japanese machine tool manufacturers have won over customers with their high-quality products, particularly in precision finishing processes.
A representative from Makino Milling Machine stated: “Our strength lies in micron-level machining precision, which is why Chinese new energy vehicle manufacturers focused on quality have chosen us.” Since securing a large procurement order in 2021, the company has maintained a steady volume of orders.
Makino's core products are CNC machine tools that process materials through rotating cutting tools. The company is currently prioritizing capacity expansion for these products at its Kunshan and Wuhan factories in China, aiming to achieve an annual production target of 2,050 units by 2029—a 21% increase from 2023 levels. Although the precision of domestically produced machine tools in China has yet to meet Japanese standards, Makino is actively expanding its market reach by offering more competitive pricing and shorter delivery cycles.
Tsugami Corporation, another major machine tool manufacturer, derives over 70% of its revenue from the Chinese market. A company representative emphasized: “Beyond delivering exceptional machining quality, we maintain a team of over 1,000 professional maintenance and inspection technicians in China. Our comprehensive after-sales service system is precisely the key factor driving customer choice.”
In 2024, Tsugami Corporation expanded its factory in Zhejiang Province, China. The upgrade focused primarily on lathe production, increasing capacity by 20%. The company stated that the facility can now produce 20,000 small machine tools annually.
A representative from Tsugami Corporation stated: “Although overall investment by Chinese automakers has stabilized, demand for mold-related projects remains robust.”
Molds are essential for manufacturing components such as doors, hoods, and battery enclosures. BYD operates multiple mold manufacturers in locations including Beijing, Shenzhen, and Japan.
Meanwhile, BYD is internalizing mold production through its group companies to enhance price competitiveness.
Other independent mold manufacturers are also increasing investments to meet automakers' demands for faster delivery and lower costs. Consequently, orders for CNC machine tools and other equipment from Japanese machine tool manufacturers have risen.
However, the aforementioned order growth is likely to slow down. A representative from Tsugami Corporation revealed: “Although current order volumes remain strong, order cancellations are gradually increasing, and market prospects are uncertain.” The company noted that amid China's intensely competitive new energy vehicle development and sales landscape, there are signs that customers are reassessing their equipment procurement plans.