China Steel Corp (中鋼), the nation’s biggest steelmaker, yesterday said it has invested in Tesla Inc’s local engine supplier, but denied media reports that it had improperly intervened in the Taiwanese supplier’s operation.
In October last year, China Steel invested an unspecified amount of capital for a 20 percent share in Tesla’s major engine supplier, Fukuta Electric and Machinery Co Ltd (富田電機). Through the investment, the Kaohsiung-based steelmaker secured two seats on the engine maker’s seven-seat board.
“China Steel supplies high-end steel to Fukuta Electric. It is the only steel product that has received certification from Tesla for its electric cars,” China Steel said in a company statement yesterday.
“The investment aims to help foster the nation’s electric car supply chain,” it said.
To bolster Fukuta Electric’s corporate governance and fend off growing competition, China Steel said it proposed adopting a better management mechanism to shore up the company’s fundamentals.
“All of those proposals were approved by the board, not only by some board directors,” the steelmaker said.
Its comment came after the Chinese-language Commercial Times reported yesterday that Fukuta Electric chairman Gordon Chang (張金峰) said that China Steel had intervened excessively in the company’s operations.
China Steel replaced Fukuta Electric’s chief financial officer and its accountant without discussing the changes beforehand with Chang, the report cited him as saying.
In addition, China Steel cut the payroll of Fukuta Electric employees and overhauled the company’s workflow, which affected employee morale, the report alleged.
Unlisted Fukuta Electric has been supplying electric engines to Tesla since 2007. Currently, the US electric car brand contributes about 30 percent of the Taiwanese firm’s total revenue.
Fukuta Electric also supplies engines to auto brands in Europe and Japan as well as Taiwan’s Luxgen Motor Co (納智捷汽車).
The engine manufacturer invested NT$1 billion (US$30.6 million) in a new engine plant in central Taiwan in October last year to cope with rising demand from Tesla. The plant is expected to be completed in three years.
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