Good morning, good afternoon and good evening. Thank you very much for joining Nidec’s Q3 Fiscal Year 2020 Conference Call.

I am Yoichi Orikasa, General Manager of Kyoto Branch of Mitsubishi UFJ Morgan Stanley Securities. As we kick off the conference, I’d like to ask you to make sure all the materials are ready in front of you.

If not, please download the files on Nidec's homepage at this moment. Please note, this call is being recorded and the conference call – conference material will be posted on the company's homepage for the coming week for investors and analysts who are not able to join today's call.

Now I'd like to introduce today's attendees from Nidec Corporation. Mr.

Jun Seki, Representative Director, President and Chief Operating Officer; and Mr. Akira Sato, First Senior Vice President and Chief Performance Officer.

First, Mr. Sato will make a presentation.

After his presentation, we will move on to our Q&A session, and Mr. Seki and Mr.

Sato will answer your question. Mr.

Sato now present Nidec’s Q3 fiscal year 2020 results, future outlook and management strategy. Mr.

Sato, please go ahead.

Thank you very much, Mr. Orikasa.

Good day, ladies and gentlemen. Welcome to today's conference call.

My name is Akira Sato. Mr.

Jun Seki and myself will be your main speakers and answer your questions. Joining us also is Mr.

Masahiro Nagayasu, General Manager of Nidec’s IRD. For the forward-looking statements, please see Slide #2 of our presentation material for details.

Now I will review the key figures. Please see Slide #3 for fiscal year 2020 nine months results.

As shown on Slide #4, nine-month net sales stood at record high JPY1,185 billion, 2.2% higher year-on-year. The nine-month operating profit increased 24.0% year-on-year to JPY115.5 billion.

The December quarters net sales increased 4.4% quarter-on-quarter to JPY433.2 billion, marking a record high for two consecutive quarters. The operating profit for the same period increased 12% quarter-on-quarter to JPY46.4 billion due to increased sales and contributions from comprehensive improvements on cost structure and optimization of fixed cost through WPR4 program.

Based on these results, we have made an upward revision to the full-year, fiscal year 2020 financial forecast. On Slide #5 and 6, you have step charts showing the net sales and operating profit year-on-year and quarter-on-quarter, respectively, by product groups with exchange rate effect, eliminations and structural reform expenses.

As you see the lower chart on Slide #6, Automotive, Appliance, Commercial and Industrial or ACI, and Machinery segment have been the main drivers for the Q-on-Q profit increase in the December quarter. Please see Slide #7.

As you see on the right-hand side, the free cash flow keeps increasing from the June to December quarter through continued efforts to improve cash conversion cycle or CCC. And we have achieved record high operating cash flow and free cash flow on the December quarter.

Please see Slide #8. Based on December quarter result, we have made an upward revision to the year - fiscal year 2020 financial forecast, which is a second time this fiscal year following the previous quarter.

Please see Slide #11. Due to the net sales recovery and the contribution from the WPR4 program, the quarterly operating profit ratio is on its way to steady improvement after forming the bottom in the March quarter of fiscal year 2019 and have recovered to 10.7% in the December quarter, while achieving record high net sales for two consecutive quarters.

Please see Slide #12. Green transformation is triggering innovations in the auto industry, which is similar to those in the TV and camera industry that occurred in the past.

The industrial structure goes from local vertical integration to global horizontal specialization, the product design from integral architecture to modular architecture. In the Automotive industry as well, we are seeing shift from more complicated and expensive internal combustion engine, or ICE, vehicle to simpler and cheaper electric vehicles, or EVs, which makes cost competitiveness even more important.

Please see Slide #13. We are foreseeing that growth we experienced for over 30 years in the hard disk drive industry is going to happen in auto industry, triggered by electric vehicle development.

As you see on the left-hand side of this slide, the hard disk drive market has been growing significantly based on technological innovations related to motors, magnetic heads, media, et cetera. Now, in the EV market, as you see on the right-hand side, rapid growth is expected, following the turning point year of 2025, and we need to prepare for mass production.

For this purpose, we are aiming to construct in-house production for inverters and gears, while preparing more assembly line and also aiming to pursue the cost competitive advantage of mass production. Please see Slide #14.

The total number of six EV models using our E-Axle, which is traction motor system for EVs, has exceeded 100,000 units on a cumulative basis as of the end of December of last year. And the sales volume in the December quarter increased 25% year-on-year.

Please see Slide #15. The profitability of automotive existing business, which is excluding impact of the traction motor-related business and Nidec Mobility’s business from auto business have recovered to double-digit operating profit ratio and is keeping the upward momentum after the decline in December quarter of fiscal year 2018 in the wake of Chinese economic slowdown and bottoming out in the June quarter of fiscal year 2020 caused by COVID-19.

Slide #19, sorry, please see Slide #16. Both net sales and operating profit ratio of ACI are steadily improving from June to the December quarter due to the WPR4 program.

ACI is currently undergoing a comprehensive review of its cost structure and it is ready to improve operating profit ratio by optimizing outsourcing costs, labor costs and fixed costs. Please see Slide #17.

Sales of other small precision motors has hit record high in the December quarter due to the new stay-home demand. We are seeing further growth of our business brushless [ph] DC motors which are used almost everywhere, in such applications as home appliance, living room, sanitary/water supply, kitchen, smartphones, PCs, gaming consoles and printers.

Please see Slide #18. Ultra thin and ultra small fan motor, FDB or UFF, which is used mainly for PC application is keeping high level of shipment of over 5 million units for three consecutive quarters and is firmly supporting the demand for work-from- home.

Lastly, on behalf of the entire management team, we like to thank our customers confidence, suppliers for their support and commitment, as well as our shareholders. At this time, we like to open up the call for questions.

Thank you for your attention.

Thank you very much, Mr. Sato.

Now we'd like to turn to the Q&A session. Mr.

Seki and Mr. Sato will be pleased to answer your question.

[Operator Instructions] Our first question today is James Pulsford from Alma Capital. James, please go ahead.

Thank you, and good evening. I'd like to ask if I may about your precision small size motor area where clearly you're one half of it, the other precision motors performed very strongly, but the HDD side was weaker or in sales terms weaker.

And could I just make sure I understand first what's happening within the HDD side? And volumes, I think, we're about JPY41.3million for the quarter, so that's a very sharp fall, but ASP rose.

Could you comment on what happened within that in terms of mix, so if you have, for example nearline volumes in ASP and enterprise volumes? And if you could comment on your changes in share in the different areas you have there, that would be very helpful to understand what's happening within HDD, please?

Okay. This is Masahiro Nagayasu speaking.

So clearly, the volume drop, our shipment volume in September quarter was JPY63.2 million and this December quarter number is JPY41.3 million. And this is mainly because one customer did not order our motor for the fourth quarter, December quarter.

So that means the change of the mix, as well as the change of the pricing. And clearly, as you may be calculated, the ASP rose from $7.02 in September quarter to this December quarter $7.46.

So overall, we see the higher ASP, but the lower volume, mainly because we could not get the order from a particular customer. Is that fine?

Yes. So in terms of the volume fall, was it much greater for commodity items?

And so for nearline and enterprise, it's much less? I mean, so without, of course, again too much detail, do you have the volume figures for those, and that would be helpful if you do?

In terms of the so-called the revenue share of server [ph] area, meaning a 2.5-inch high end and nearline was a 54.5% in September quarter, but this December quarter that rose from - that number rose to 64.0%. So clearly, the 2.5-inch number is down, but not as much as 2.5, 3.5.

And nearline number is also down, but not as much as the 3.5, 2.5. So overall, the product mix improved.

Thereby the share of those server area rose from 54.5% to 64%. Is that fine?

Okay. That’s fine.

And just - thank you very much. And just to follow up, obviously, you're a little constrained in what you can say.

But in this particular quarter, you received no orders at all from what has hitherto been a main customer. You can't predict the future.

But it's possible, do you think it's quite possible that you will not receive further orders from that customer going forward is quite possible. Would you agree with that statement?

Well, number one, that we are not forecasting the number as you know, so it's our policy that we are not talking about the future number. But as we say, maybe the previous quarter that we are not expecting any sale to that customer during the March quarter.

So there are no sales in the December quarter. There will be no sales in the March quarter for that particular customer.

Okay?

I understand. Thank you very much.

I’m sorry, just - so I don't take too much of your time for other people. But in terms of the other precision motor side, where you saw a sharp bounce in sales from there.

Were there any particular areas that you would highlight, I know within that you have fan motors, DC motors, heat sinks. In terms of the strong recovery in – or strong growth in sales, could you comment a little - in a little more detail about what drove that?

So in terms of the non-ACT motors, small precision motor is something that you're asking, right?

Yes, correct. Non-HDD.

Yes.

Also, maybe we're showing you the Slide #17, where those motors are used. So particularly, we see a motor for the home appliances is very, very strong.

And thereby, we were talking about the home appliance, living room, sanitary, kitchen, whatever. Also, we are seeing very strong demand continue in the IT area, such as a smartphone and PC.

And also, for December quarter, still the gaming consoles have been a very - quite a good demand. And all those would help to achieve the record high subs of the non-HDD small precision motors, as you see in Slide #17.

Okay?

Okay. And do you think this is a very strong, because obviously for this quarter, we're in a - naturally in a period of very strong demand recovery in areas like autos, and also in IT?

Have you seen a - do you think, is this largely reflecting this very strong cyclical upturn? Or is there a change into - a significant change that's happened in the short-term, looking at the share between brushless and brush motors?

No. At this point, we cannot say how long this very strong demand continues.

It could be cyclical, it could be more prominent. But so far we have seen a very strong demand in the home appliances as well as IT.

And also server demand has been somewhat weak in September and December. But we are seeing some sign that is coming back.

So, seasonally, March quarter would be somewhat weak quarter, that we understand. But what's going to happen from a next June quarter is something that we have to see.

It that fine?

Great. That's fine.

And very last – apologize, very last question, just to understand the profitability, which was stable overall within that area. So the hard disk drive area, was there any change in profitability?

Can you comment on that please for Q3?

Okay. We are making public that the OP margin for the hard disk drive for the December quarter was something like 31.8% growth number and loan growth number is 37.4%.

So those are the number for HDD spindle motor business for the December quarter. Clearly, those numbers are higher than a previous September quarter.

Okay?

Okay. Thank you very much, indeed.

Thank you very much. Our next question is from Zach Inoue of MUFG Securities.

Zach, please go ahead.

Good morning. First of all, congratulations on your very strong results.

Two part questions from me. This is on your EV traction motors.

Slide 14, very helpful always, you mentioned about Chinese automakers increasing support orders plus, can you provide more color regarding order increase coming from the Chinese EV automakers? My second question is regarding to your EV traction motor production capacity plan.

If you can give us a little more clarity or reminder about your production capacity plans going into 2025 and maybe 2030 that will be great.

This is Seki speaking. First fast questions traction motors.

So can you repeat it again your first question?

Oh, sir. Yes, order inquiry coming from the Chinese EV automakers, previously you mentioned, you still have a…

Thank you for reminding me. First, up to Q2 financial announcement, we keep telling trading OEM is keep increasing.

Like it was 16 and increased to 22. But we had a lot - we received a lot of complaints from Williams.

They don't want to us to mention because area by area maybe investors and analyst made leech [ph] them because of some characteristic. So from this time, please allow us not to mention the number of new OEMs into our business.

Instead, in this quarters from October, November, December for three months, we received 15 new projects, it's all decided, but [indiscernible] Usually quarterly we have five to six. So this 15 is more than doubles.

So it's really representing our ArrayList [ph] based on our result is getting more together with acceleration with EV from Europe and China particularly. This is expanding to Japan and US.

Of course this 15 has a lot of Chinese business, please and as I mentioned in the beginning, please allow not to tell you too much detail. And then for your second question about the capacity preparations, while we are having many new projects from customers, we still don't want to change JPY2.5 million targets for 2025, because we're seeing probably after ‘25, volumes will accelerate, but for the preparation stage, from now to ’25, I think our customer volume is some are very desirable, but some are not.

So we don't want to be too much optimistic, but at least JPY2.5 million is our plan. And then we will be ready to produce JPY2.5 million or over buy that times.

And then to do that, what we are making effort is in-house parts, and in-house equipment. For example, wiring machines, or dyes, or measurement machines, and then for the components, maybe gears and inverters.

Because we believe after ‘25, volume will accelerate all of a sudden. And then if we are relying on those too much outside, we can't get to speed and then also, price from part and components and equipment will be very expensive.

So we want to control those. So now our target is one set of price against outside and the one set of lead time from market outside.

Of course, this is very aggressive, but we're confident to achieve this, and that we are preparing. And then because of - thanks to short lead times, and we don't have to make too much hourly decisions, because our lead time is short.

So those are what we are doing. But as you know, we already have a two-front, which already started one in [indiscernible] and the next year, we have a second line in [indiscernible] And we are planning for fourths and fifths.

So that's - and then of course, in Europe. We have a firm plan to produce attraction order for one customer.

So that's ongoing. Is that clear answer to you Zack?

Yes, very clear. Thanks so much.

Okay.

Thank you for your question, Zack. Our next question is from Ramsey Needam of Fed Street [ph]

First of all congratulations on the great quarter. It's really impressive.

So one of my first question on WPR4 program. So understanding, first half of the year, you saved almost JPY10 billion in each quarter.

Can you highlight a few things, what you achieved in Q3 in terms of how much you saved the costs in the areas? And also what would be the focus and scope of this program going forward?

The effect of WPR4 in December quarter might be JPY15 billion. It's up to – for all the JPY10 billion in September quarter, mainly due to the procurement cost reduction, because the market is soft at this point, maybe we are seeing some kind of up trend of the raw material, but December quarter we materialized.

That's kind of procurement, cost reduction. And also the deducing the fixed cost that's another driver to create some positive effect.

So for instance in Europe of ACI that certainly allow restructuring – integrating the factory. So that we - by doing so we can reduce the fixed cost in European location, as for ACIs the operating profit margin is coming up to about 10%.

Is that fine?

Yes, thank you. Thank you.

Yes, I have one more question to follow up on James question on HDD. So can you - is it possible to mention the market share in the month of December for Nidec?

What market share?

HDD, hard disk drive motors market share?

Oh, hard disk drive, okay.

Yes.

So, at this point, PCV shipment of the quarter was estimated by Tax Assessment [ph] research 67, then we shift 41. There you can correct.

And question on R&D. So I think for nine months the R&D was around JPY49 billion or you can call it JPY50 billion, which was roughly around 58% of your full year guidance.

So is that R&D is unrestrained so far, we can expect a lot of R&D coming in Q4. Like, what's happening in R&D area?

You mean our total R&D or any particular business?

Yes, total R&D and if possible, if you can give some numbers on EV-related business that would be great?

R&D?

Clearly at this point, we are keeping the R&D cost pending for fiscal year 2020 which is 990, sorry, one minute.

Yes, sure.

Yes, 85...

I think your full year guidance is 85…

JPY5 billion of R&D in fiscal year 2020. So keep this number.

So in March quarter, maybe we are going to spend a little bit more. At this point, maybe we are reducing the R&D cost, try to reduce R&D costs.

For instance, in sourcing from testing in R&D. So we invested kind of a motor bench, which is a machine for testing.

That's a way to reduce R&D cost. So those are effort contributing to reducing the R&D costs.

But we still keeping the JPY85 billion of R&D cost in fiscal year 2020.

Let me answer a few point…

Yes. Sure, please.

Yes, please continue.

This is not a straight answer to your questions. But we successfully did these things while making efficiency better, while on the first year [ph] while is testing cost of traction motors.

We invested lots of test bench into China. And now it's started earlier than our brands.

So traction motor testing costs to outside is extremely high than in transfer per head over this internal test bench, so we are saving from that area. And second, we have a platform concept introduced into traction motors.

So originally we estimated very high R&D costs for peak differentiations. Time like then, we successfully reducing differentiation level for product by product, that's reducing.

And last, this is nothing from us, but many customer is postponing many new product influenced by COVID-19. So, this is not good, since we want to have those order earlier, but nothing we can do then postponing, so that’s making a natural reductions.

So those are main driver we believe less R&D spending.

So if I can ask, is that R&D saving is one of the contributors in upward revision in your earnings?

[Foreign Language] No, no, I don't think so. The upward revision coming from mainly, the more sales.

And also the - as I mentioned before, WPR4 the effect that’s creating more positive impacts in our focus. That’s why we make the upward revision by a JPY15 billion in operating profit and fiscal year 2020.

Yes, that's great news. Thank you very much.

Ramsey, thank you very much. [Operator Instructions] Okay.

The next question is from [indiscernible] Mark, please go ahead.

Yes, thank you very much. My question is follows - several other questions that were asked on Slide 14, for the E-Axle, this is the monthly bar chart.

And when you said that you're planning by 2025 to produce is that JPY2.5 million per year of the traction motor products compared to the current situation where they're 100,000 cumulative, is that is the correct way to read this?

Thank you, Martin. It is, [indiscernible] So next year is more than doubles.

And then ’24 JPY1 million and then ’25 will be reaching 2 point. At this moment, it's precisely along the JPY2.3 millions.

But of course, we are expecting an additional order on top of that. Actually, this is a good reference on page 14.

As you can see, you know, quarter wise, it's better than last year by 25%, as you can see volume flow from each and other, quite small. Actually, I don't want to criticize for customers, but contract volume from each other are much bigger than this.

So if we start up only contract volumes, this is almost triples from this lease out. So based on that we are compressing customers volume for forecasting ‘25.

So if we tap with ARPU [ph] we also - we think it's cheap JPY2.5 million, but last time, no complex or customers order JPY25 million and this time, we compressing. What time is 0.8 and what time is 0.7 depending on customers and the market.

So it's much bigger, but I think current forecast is much more realistic. But straight answer to your questions, those where - we are receiving from order, and then with our completion misuse [ph], so 2.5 will come.

Okay, and that is quite a ramp up. But obviously what you're saying, you know, in terms of demand profile and stuff would make that possible.

Can you just tell me this roughly, you know, you look - we're looking at monthly charts here with six models, and you know, the INS is by far the biggest, when can we start to see, you know, more models and more colors joining these monthly charts? Would that be towards the end of this calendar year, we'll really start to see things ramp up in terms of more models and more volume in your opinion?

Sorry, Martin, I couldn't capture your question clearly. Can you follow up again?

Yes, just a very simple, just qualitative question, on page 14, when you look at the bar charts, you have six models there. And you know, gradually you see more models being added to the sales figures.

When can we just qualitatively start to see you know, more colors added to these bars, I mean, more models coming on. I appreciate your previous statement that you can't really reveal what OEMs are asking you, I know that’s the secretive, but can just give us a quality feel, is it going to be towards the end of this calendar year or sometime in 2022 that these numbers really start to be visible in sales.

Volume increase coming from expansion order, and then I think it will stay small from each color. I think it's increased.

If we pull back page 13, okay, we are splitting the three areas, and then up to 25, we say this is introduction views, lots of hesitation from both OEMs and customers mainly because battery is high because battery price is high, EV is expensive, is on hybrid, that’s a reality, okay. But we are seeing battery price coming down.

And then also we have seen customer, not all of the customer, but some of customer is trying to compromise autonomy distance. So at this moment, all OEM preparing a big capacity of batteries, such as 60 kilowatt and 80 kilowatt, while the unit price of battery is very high, but battery is coming down.

And some customers say I'm okay to drive only 300 kilometers because he has taken two cards, or he's not going to long travel because of his age, such as such. So if it's like a JPY10 [ph] hour and then if he compromises like a 20 kilowatt, suddenly EV become much cheaper than hybrid that we have seen.

And then we're setting like a 25 is breakpoint, it's going to accelerate. So, from that point, even we have a same order each color, each order become much bigger, that we are seeing.

So this view we need to be very patient while we are having inefficiency developed more than ever, but volume remains the same because we have a lot of a competitor - competitors cannot stay with this situation and then we are very welcome competitor to escape or remove from this area, only stronger state is safe, that we are saying in EV.

Okay. Thank you.

That clarifies it a lot. Thank you so much.

My next question is…

Thank you.

Small motor demand firmness, as demand for these motors as you mentioned moves to you know, TOTO Washlets and washer dryers and all that stuff. Is this uptick you know probably due to the stay at home situation changing your long term CapEx plan for the HDD or for the small motor area?

No, at this point that’s not so much changed. Because hard disk drive business is already cash flow business.

That’s why we do not plan to invest money to that business. On the other hand, other precision motors, maybe demand is very high.

That's why we are not planning to invest a little bit more to increase the production capacity in those – prior areas. Also – total capital expenditure is another JPY120 billion this part total fiscal year 2020.

So we do not have any plan to increase the capital expenditure for increasing the production capacity for those areas despite.

Its Seki, speaking. The demand might have started because of those stay homes.

But what we are seeing is we're becoming much more sensitive against decarbonisation, CO2 reductions. So everybody are very sensitive to have a much more efficient energy spending.

And then obviously, our Brushless Motor, very efficient for every aspect, bit expensive brush - brushing Motors but much more friendly for environment. So even small product to large product, we are sharing customer needs more efficient ones, that's really developing our fields.

So may start with stay home, but we believe this is more sustainable.

And you think your current capacity level is sufficient to meet the future demand?

Future demand?

Yes, as you know, more people as you mentioned, you know switch to Brushless because of the energy efficiency, plus the near term situation with work at home.

I cannot say that by when how much. Overall Brushless Motor share is still 30%, 35%.

So, we have a 65%, 70% loop to expand.

Okay, understood. I am just going ask one more question.

And taking lot of your time. So I apologize.

On this presentation on the very cover, you put a picture of what looks like a compressor from Embraco. Can you tell us why you chose to put that picture there?

And just are you seeing a big uptick in demand because of coal chain demand globally for these types of products?

Yes. Will you say your question more slowly, because the quality of the voice is not so good?

Oh, I'm sorry. Yes, on the presentation packet that we have on the first page, you put a picture of what looks like a compressor right from Embraco.

Can you tell us why you did that? And is there indeed a big surge in demand for you know, for cold chain investment globally that you're seeing through Embraco sales.

First page is - this picture is a compressor for refrigerator. And as you know the - we acquired Embraco in 2019 and increasing the production capacity and demand is very much strong at this point.

That's why we are spending money to increase the production capacity, because the - maybe the more efficient the compressor wash refrigerator is needed in the marketplace. Because we allow the critical [ph] staying home and we need more efficient division, as far the demand is getting a bit stronger at this point for those kind of compressor for immediately.

Again, this is Seki speaking. Its fact, demand of compressor its very high.

We don't have enough capacity, volume, the sales volume is as we can make. And then we don't know really reasons, but we guess you know, this is caused by stay at home.

People need lots of capacity to keep because they don't want to go up. So actually for much heavy use and home use compressor is crying [ph] then maybe because of this COVID-19 and then if COVID-19 become stables compressor demand may go up.

Therefore, we don't want to invest too much, is also trying but we are doing minimum investment and the maximum effectiveness of capacity increase that limit us at this moment.

Okay, thank you very much for answering my questions.

Okay.

Mark, thank you very much. Our next question will be coming from again, additional question from Ramsey.

Please go ahead.

Just a quick one, just looking at the guidance, so previous year guidance on PBT and net income, the gap between PBT and net income is around 31,000. But with the revised guidance the gap has actually shrunk to 31,000 to 30,000.

In spite the rise in PBT. So, is there any tax effect or can you explain is there any something we have to observe out there?

Are you talking about the gap between the profit before tax and just for net income, is that gap that you're talking about?

Yes, so the gap has shrunk with the increase - with the revised estimate. Even though there is an increase in PBT, so is there any tax effect we are talking about?

Yes, it is - we try to improve the global effective tax rate. As you level [ph] that effective tax rate is expected at 20% in…

Okay…

Updated forecast, and that’s fine.

Okay. Thank you.

That does help.

Okay, thank you, Mr. Needam.

We have only a few more minutes. And the next question is from Harry Waight of BMO Global Asset Management.

Please go ahead.

Hi, there. Thank you for taking my questions, and congratulations on the results.

Just a quick question about your Slide 13, the traction motor vision slide. When you talk about 10 million units by 2030, could you just let me know if you have a rough estimate of what that - what market share you're imagining you would have in that year?

Is that like a 25% market share or 50% market share of all of the E-Axle was being sold? Or do you not have that kind of modeling?

Thank you, Harry. We're expecting 30% to 35% market shoot at this moment.

But Harry, we're seeing a very different view since last year, September, October. It's called Shanghai GM Hongraminium [ph] that’s extremely cheap EVs.

It's only $4000 or $4.2000 EVs. It's small, but it's really four wheels.

And then 85 Newtons, they made a compromise for me drives [ph] it's only 10 kilowatt batteries, therefore officially its 220 kilometer drives, maybe the other base is at 70, 80 kilometers. But after the launch, next month, they sold 20,000.

And then November, December, they reached to 30 to 35,000. That Shanghai [indiscernible] there will be increased one line to adapt this market demand, and then it's not enough.

So they are now quickly adopting one more line. So capacity become 50,000 per month, which is 600,000 per year.

And then still, I think demand is much more. So this is really proving if EV launched cheaper than gasolines, it's really flying.

And then, you know, usually lowest price EVgo [ph] was around $8,000. And then many people love to purchase a car, but their income still leach [ph] to purchase.

And now it's lower and then many people actually do that in China is very true to purchase this car. And then we believe this will be expanded into China, and possibly like India, Africa, Latin Americas.

So by that time, CIV concept is completely changed. So current EVgo segment will stay with like 80 million to 90 million, but on top, we're expecting maybe 100 million to 200 million new demand may come because of this cheap segment.

So with that, you know, we're of course challenged that area too. But we have to say this green line is based on current structure of decrease, and then future it may not, we – I just wanted to be transparent to you.

That new segment may come and then we may have to lead to new designs. But…

Okay, thanks. Thank you that makes sense.

And could I ask one very quick follow up please, just given Tesla's reputation for vertical integration, and given how valuable and important apart E-Axle is within an electric vehicle, do you model or imagine in the future that they will be a significant customer of yours? Or do you think that they're likely to remain kind of I would look to have this product manufactured-in house?

That study integration you mean is like a page 12?

Yes, exactly. Just thinking about how much Tesla likes to do everything and make as much as possible internally rather than outsourcing.

I wondered whether…

That's you are taking about vertical integration…

Yes.

You know, has no parts equipment by equipment we have to split to two, one is a very popular, everybody can do and then its same equipment as like engine transmissions, like die casting machines typicals, okay wire engine transmission abundant volumes and traction motor housing, mainly quiet produce. So that's not rushing point.

But meanwhile like winding machines or die for those are very special. So special area will be very congested, because you know, page 13 and then after 25 it's accelerating.

So that we really have to introduce, as like in-house we believe. And then we have to split those two and then in future once demand is stabilized, we don't have to keep those, we may have - we may do this, we may keep it depending on cost and profitability.

So those are what we're thinking.

Okay, thank you.

Thank you.

Thank you, Mr. Waight.

And thank you very much for your active participation all participants. Now, we would like to conclude the conference call.

I'd like to appreciate for your active participation. Should you have any further questions, please do not hesitate to contact Nidec Corporation, or your sales representatives at Mitsubishi UFJ Morgan Stanley Securities.

Again, thank you very much for joining the conference call. And you may now disconnect.

Thank you very much.

Thank you, everyone. Thank you.