Japanese SMEs Showing Their Skills in the Power Game

The growth of alternative power sources is transforming the auto and power-generation industries, forcing technology to keep pace with a desire for cleaner, smarter, more efficient products. New energy solutions are being developed as countries seek to reduce reliance on fossil fuels and gas-driven vehicles. Tech firms are scrambling to make the alternatives viable and Japanese small and medium enterprises (SMEs) are leading players in the field.

Producing 3.2 Billion Fuses Per Year

As the market leader in automotive fuses, Pacific Engineering Corporation’s products are a key part of the electric car revolution. Fuses prevent electrical overload and short circuits in all cars, but when the car is powered by electricity, they become even more vital. PEC has consistently developed new fuses to handle advances in the automotive world and it has taken 70% of the global market for high-voltage fuses in electric vehicles. PEC produces 3.2 billion fuses per year and has a 91% market share in Japan and 48% worldwide. But the transition to hybrid and electric cars has not always been easy. “You could say it’s been a headache,” PEC President Ogawa Takahisa admits. “But at the same time, it’s been an opportunity.”

PEC’s innovations include fuses that prevent premature blowing due to high-current loads and other fuses designed to handle the high load of electric vehicles. The company invests heavily in R&D and has always been at the forefront of trends in the industry. The rapid expansion of hybrid and electric cars has boosted PEC’s sales figures. The company reached cumulative sales of 10 billion auto fuses in 2002, took eight years for the next 10 billion and five years to reach 30 billion. It sold its next 10 billion in just three years.

“One of the biggest challenges has been to respond to the demands of our customers over what has been a relatively short period of time,” says Ogawa, who is proud of PEC’s 1.5 billion yen ($14 million) testing facility, which gives the company the technical capacity to respond to different automotive developments and technological breakthroughs. “One of the characteristics of our company is we do everything ourselves. Voltage requirements for fuses have jumped from 270 to 1,000 volts and customers keep asking us to make them smaller and lighter, so having a number of very talented engineers on board has been essential.”

Bringing Down Power Costs

Material Concept may only have 16 employees, but its impact on electric vehicles and power supply could be dramatic. The company was formed to capitalize on the ground-breaking research on copper paste being done at the prestigious Tohoku University in the northern Japanese city of Sendai. Copper paste is being developed as an environmentally friendly and cost-efficient alternative to silver paste, which contains lead, in power-generation and other electrical equipment. Copper paste is up to 10 times cheaper than silver paste and Material Concept has managed to lower electrical resistance by up to 100 times compared to its competitors. Usage areas for copper paste include electrodes and conductive wiring for semiconductors, LED displays and electric vehicles.

“One of our original goals was to never use a material that wasn’t friendly to the environment,” Material Concept CEO Koike Miho says. After developing the first copper paste for use in solar cells, the company is now expanding its application to various electrical parts, including wiring in electric vehicles. “EV manufacturers are saying that we are contributing to a 10% energy reduction in EVs,” says Koike, who founded the company in the Tohoku region in part to help recovery efforts there. “This area was greatly affected by the 2011 earthquake. We really wanted to make a contribution to the area and believed our renewable energy research and technology would help the reconstruction efforts. Our product has much lower resistance in comparison to those of other manufacturers. This means that a greater amount of electricity can be transmitted, which leads to saving energy.”

Material Concept is set to move into new premises in Sendai as the company ramps up the commercial side of its operation. After its foundation in 2013, it quickly attracted 250 million yen ($2.3 million) in investment money from the Innovation Network Corporation of Japan, a joint public/private body established to advance innovative industries, and was also supported by Japan’s New Energy and Industrial Technology Development Organization, as well as a number of private companies.

Making Batteries Safe

Another company interacting with electric vehicles is Kataoka Corporation, which manufactures battery charge-discharge testing systems. Kataoka has produced around 13,000 battery-testing machines for battery manufacturers and claims a 16% share of the global market and 60% in Japan. “The question we always ask ourselves is whether or not we can be number one in Japan or even the world,” says President Kataoka Koji.

The testing process is very extensive and includes repeatedly charging and discharging the cell, and measuring a variety of parameters to monitor the capacity and stability of electricity in the battery. “The test equipment plays a critical role in the safety and quality of the battery," Kataoka says. “I think we’re probably the only company in the world producing such a complete and safe system that can perform all the required tests.”

The market for batteries of all types is on an upswing. “Looking at the lithium-ion market from an optimistic standpoint, I can see it expanding by up to six times in the next decade, but if you want to be more conservative, I still think the market will expand threefold over that period,” Kataoka Director Suita Masashi says. In 2016, Markets and Markets predicted the global battery market would rise to $17.25 billion in 2021. This year, it reported the market had already reached $92 billion and will rise to $152 billion in the next five years.

At a G20 ministerial meeting on energy and the environment last year, a statement was issued emphasizing the importance of supporting the private sector “to develop and deploy affordable, reliable, sustainable, and low GHG [greenhouse gas] emissions energy systems, and to achieve a cleaner, more resilient and sustainable future.” The G20 statement also recognized “the role of startups and Small and Medium Enterprises (SMEs) in promoting energy transitions.” Japanese SMEs such as PEC, Kataoka and Material Concept are responding to these demands as the world moves to adopt new and environmentally clean energy solutions.