Dear all, thank you very much for joining Nidec's Conference Call. I am Yoichi Orikasa, General Manager, 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 right now. Please note, this call is being recorded, and the conference materials will be posted on Nidec'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 Executive Officer. Hello, everyone. This is Seki. Mr. Hidetoshi Yokota, Senior Vice President and Chief Financial Officer. Hello, everyone, this is Hidetoshi Yokota. First, Mr. Yokota will make a presentation. After his presentation, we will move on to a Q&A session, and Mr. Seki and Mr. Yokota will answer your questions. Mr. Yokota now presents Nidec's Q3 fiscal year 2022 result, future outlook, and management strategy. Mr. Yokota, please go ahead. Thank you, Orikasa-san. Good day, everyone, and welcome to today's conference call. My name is Hidetoshi Yokota, Chief Financial Officer of Nidec. Today, Mr. Jun Seki, Representative Director, President, and Chief Executive Officer of Nidec, and myself will be your main speakers and answer your questions. Joining us also is Mr. Masahiro Nagayasu, General Manager of Nidec's IR team. For a forward-looking statement, please see slide two of our presentation material for details. Now, I'm going to review the key figures. Please see slide three for the FY 2021 nine-month result. As shown on slide four, nine months net sales stood at record high of JPY 1,407.2 billion, 18.8% higher year-on-year. Nine months operating profit and profit before income tax increased 16.6% year-on-year to JPY 134.6 billion, 19.4% year-on-year to JPY 130.6 billion respectively. Both stood at record high. Q3 quarterly net sales increased by 7.2% quarter-on-quarter to JPY 496.5 billion, marking a record high for three consecutive quarters. Based on these results, we have made an upward revision on year-end dividend increased by JPY 5, resulting in the period projected aggregate annual dividend of JPY 65 per share for fiscal year 2021. On slide five and six, we have structure showing the net sales and operating profit year-on-year and quarter-on-quarter respectively by product group with exchange rate effect, elimination, and structural reform expenses. As you can see on slide six, all of the segments increased their net sales quarter- on- quarter. With regards to operating profit, appliance, commercial, and industrial, or ACI, declined due to increased material costs. However, small precision motor and automotive increased despite this adverse factor. Machinery declined as the September quarter had a one-off profit increase related to the acquisition, and electric and optical components and others made an increase. Please see slide 10. We are aiming to become number one automotive hardware manufacturer by anticipating the strong electrification demand boosted by CASE, which means connected, autonomous, and sharing, and electric. In the EV structural motor-related business, mass production of E-Axle at the joint venture with Stellantis is expected to start in the second half of fiscal year 2022, in addition to those being mass produced in China. We are also receiving new orders from Chinese, European, and Japanese OEMs, as well as U.S. EV startups and newcomers from other industries, and the turning point of FY 2025 gets closer. In other motors and auto parts, we have prepared and continue to prepare highly competitive product lineups in ADAS or advanced driver assistance system, powertrain, chassis, and body area. With those product group, we are aiming to achieve JPY 1 trillion net sale organically and JPY 300 billion additional net sales through M&As in FY 2025 in the automotive segment. Please see slide 11. The Chinese battery EV or battery electric vehicle market, the largest in the world. Achieved dramatic growth of over 150%, entering into explosive high growth period. In calendar year 2021, not only domestic sales in China, but also exports from China to overseas countries are progressing quite rapidly and supporting increase of overall shipment. With regards to the made in China high-end BEV landscape on the right-hand side of the slide, the US company Tesla is expanding sales through exporting their main product models made in the Shanghai factory to Europe, and the Chinese company NIO has announced to export vehicles to over 25 countries and regions by 2025. Please see slide 12. The total sales volume of the 10 EV models using our E-Axles has exceeded around 265,000 units on accumulated basis as of the end of last December, and the sales volume in calendar year 2021 doubled compared to the previous year. The monthly production is exceeding 20,000 units from last November. Please see slide 13. We are going to invest around JPY 300 billion to enable vertical start up to prepare for the EV turning point of FY 2025. In addition to the six factories that are up and running or being built, we are planning a more global production site, and we are going to prepare double the production capacity of expected sales volume in FY 2025. Please see slide 14. The profitability of Q3 FY 2021 formed a bottom as a result of lost sales due to chip shortage and high raw material price, as illustrated on the right-hand side of the slide. Please see slide 15. Paradigm shift from ICE or internal combustion engine vehicle to EV is rapidly accelerating in two-wheel and compact cars as well. In the mobility area, the electric motorcycle, formed mainly in India, China and Asian countries, is expected to enter high growth period driven by environmental measures. We are currently focusing on two major markets of India and China, and have already started mass production of models for major customers. In the mini EV area, we have already received orders from major customers in the Chinese market and starting mass production from fiscal year 2022. We consider these business areas as one of the most important growth drivers in small precision motors in Vision 2025. Please see slide 16. Nidec's small precision motor division starts a shift to mobility in fiscal year 2022, with launching multiple projects for electric motorcycles and mini EVs. As illustrated on the left-hand side of the slide, our motors have been adopted by China's largest electric motorcycle manufacturer, Yadea for the first time and actual shipments started last September. The annual global market size of motorcycle is estimated at around 60 million units, the largest market being in India, followed by China and Indonesia. As electrification of motorcycle is progressing, electric motorcycles are expected to become rapidly widespread, mainly in these countries and regions. As shown on the right-hand side of the slide, we are receiving increasing orders from motors used in electric motorcycles and mini EVs that are under 30 kW and aim in mass production within FY 2022 for around 10 projects. Please see slide 17. We are implementing business portfolio transformation amid HDD motor market structural change. The sales of other small motors in quarter three has achieved a record high as HDD sales declined due to reduced HDD shipment volume. Please see slide 18. In ACI, we are executing structural reform in overseas business and looking to enter a new phase of growth. While estimating CAGR of the market at 3%-5%, we aim to grow ACI sales to CAGR of 10%-11% by creating new demand through solution proposal in markets such as HVAC and handling robot, where structural change is occurring. Please see slide 19. In ACI, we are continuing to aim for 15% operating profit ratio, even though profitability improvement slow down after progressing for six consecutive quarters since Q4 fiscal year 2019. Please see slide 20. In other product groups, operating profit ratio is keeping high level after bottoming out in quarter four fiscal year 2019. Please see slide 21. Nidec's Board of Directors has approved the resolution to purchase the share of OKK Corporation or OKK through a third-party allocation of common shares in a meeting of Board of Directors held last November, and we have executed a capital alliance agreement with OKK regarding this share purchase. This share purchase enable a mutual complement of products in the area of machine tool, which is an existing area of Nidec's business. Synergies are expected, especially in such areas, element technology development, manufacturing, and sales of machine tool business by Nidec Machine Tool Corporation, which joined the Nidec group last August. By joining Nidec via the share purchase, OKK will make a fresh start as a comprehensive machine tool market maker and enhance its product lineup as well as sales capability while quickly reinforcing its production capacity as well. After the share purchase, we intend to further expand Nidec machine tool business and believe that it can grow globally at a faster pace by making necessary investment where they are needed on a timely basis. We hope to mutually leverage our group's and OKK's respective technological capability, brand power, and customer base to contribute to the development of the machine tool market on a global scale. Last but not least, on behalf of the entire management team, we would like to thank our customers, partners, suppliers for their support and commitment as well as our shareholders. At this time, we would like to open up the call for questions. Thank you. Thank you very much, Mr. Yokota. Now we'd like to turn to the Q&A session. Senior management of Nidec will be pleased to answer your questions. Today's Q&A session will be conducted electronically. If you'd like to ask a question, please press star key and one on your touchtone phone. Again, please press star and one if you'd like to ask a question. If you'd like to cancel your request, please press star and two. We now pause for questions from the participants. Okay. Our first question today is from Alma Capital, James Pulsford. James, please go ahead. Understood. Thank you very much for your presentation. Can I ask about a little bit more detail about the margin decline in ACI and also in your materials it was different, but on a reported basis in autos, margins also slipped a little bit. I'm aware that costs, raw material costs, perhaps shipping costs have gone up. If you could perhaps break that down a little bit and also comment on what you're trying to do to offset that and the degree to which you may be able to recover that in pricing for some of the products, but perhaps not other ones, and so we get a better feel for what we think is likely to happen over the next six months in that area. Thank you. Okay. This is Yokota speaking. Let me respond to the question for the material cost and maybe shipping cost, James. For the shipping cost, yes, we are impacted, especially the shipment cost on the vessel between China and U.S. or China and Europe. We estimated the impact to ACI in quarter three is roughly JPY 10 billion and maybe automotive for JPY 5 billion. Those are the impact of vessel cost increase. For the material price increase, this happens mainly in the magnetic steel price increase in this period, even though the price increase is still continuous trend from last quarter. This time, Q3, we try to offset this price increase by asking customer to absorb the impact by increasing the price. It took a little bit longer than expected, and we cannot absorb the cost completely. That's why normally we say 1% impact it still remains after all the negotiation with customer. At this time, Q3 estimated 2% remains because of the delay in the negotiation with the customer. Especially the magnetic steel, it typically there's no surcharge contract like other copper or aluminum, those are normally we have a surcharge contract with customer, but the steel and magnetic steel there is no surcharge contract, so that's why it's a negotiation basis. The reason why, maybe you know very well in the situation, but magnetic steel, especially in the Europe area, all the steel manufacturer, all the capacity is almost occupied by European automotive OEM due to increase in the spike in the EV production. That's why high-end magnetic steel is already occupied, and all the steelmakers shift their production to high-end side. Therefore, the ACI we normally use regular magnetic steel, and the capacity of those steel is quite limited due to the shift in the steel manufacture. That's why our purchase price increased and hit by mainly in the ACI area. Of course, we use magnetic steel in the automotive area as well, but ACI is mostly impacted by magnetic steel impact. Let's say the entire Nidec this time the material cost spike is roughly JPY 6 billion or JPY 7 billion. That is the impact. Which is almost double the regular quarter due to the delay in the price negotiation with customer. I want to answer the last question. How do we see the market? Of course, we don't have a crystal ball in the market price. At this point, for quarter four, this trend is still there. For example, there is no solution for the capacity enhancement in steel manufacturers in Europe. China situation is a little bit eased. We see a little bit of stability in the steel price or magnetic steel price in China. Still, the European tighter situation continues, so we still need to fight against this price increase. Other commodity, it depends. Some is still high price, and some are starting declining, but some are climbing again. It's a bit difficult for us to foresee. We expect Q4 is still going through the same pressure than Q3. That's the general assumption for us. That's great. That's all right. Just as a follow-up, in terms of these price increases, shipping, raw materials, things you've got coming through, what proportion of those? Obviously, there may be a lag of sort of three months or even sort of longer, but what proportion of those do you think is it realistic for you to pass on to your customers? Or is there a proportion of that, maybe a half or a third, that you won't be able to pass on and you will have to sort of find through internal cost savings and rationalization? Yeah. Normally, we try to absorb or try to put in the price then try to absorb 60%-70% or even more out of our total material cost increase. Lastly, every quarter, the low figure for the material cost hike, let's say like 4%, against the turnover. That- Mm-hmm. We try to absorb 3% by asking material supplier to absorb, swallow it, or we do some technical arrangement as VA/VE, or ask customer to increase the price by absorb. We say for 3% out of 4% to be absorbed. This time Q3 we couldn't absorb 3%, let's say 2% only. The 2% remains. The time lag is. It depends on the material, but in short one is like one quarter, within one quarter. Very long one is maybe half a year. It depends on the customer and it depends on our you know share in the market and the relationship with the customer. There's some range for us to cure the price absorption, so on those periods. If you say you normally would internally absorb 60%-70%, so you would take the 60%-70% of the hit. In this environment where the increase is rather large, do you still expect to have to internally absorb 60%-70% and the price increase will cover just 30%-40%? Will that be? Is that the plan? Is that just as much- James, maybe let me precisely state it. 60%-70% this is a combination of internal effort and price transfer. Still the remaining piece to be absorbed. Thank you. in next quarter or further negotiation with customer. Thank you. In terms of price transfer to suppliers, well, if your suppliers, the price has gone up, so what percentage, how much of the increase would you expect normally to pass on to customers? What do you expect to be the case on this occasion when the increase is rather large? Could you? Yeah. Yokota-san. Let me reply. Thank you, James. This is Seki speaking. Thank you. To answer that, can we go to page 19? Yeah. You know, left-hand side is sales and right-hand side is profit. We're talking about sales. Then blue bar is the total, Appliance, Commercial, and Industrial under Nidec, and the green one is more like ACIM. Both have the same tendencies, keep increasing. Mm-hmm. You know, while sales is increasing, in reality it was a bit difficult to tell customers we want to increase price. Mm. You know? We concentrate to supply more, and then Mm. You know, also our profit is deteriorated by increase of materials, but we have more revenues. Because we have more revenues, fixed cost percentage go down, and then we can expect to offset some. At least the total profit amount is more. That happened from like Q2 last fiscal year to like Q2 this fiscal year. Yeah. Actual damage getting bigger and bigger. Q3, because maybe we have a December Christmas period and also we believe we feel saturation from like a fridge or, you know, air conditioners. Sales came down. We decided to tell customers, "Now we need compensation." That was the reality. You know, even we say Q3, you know, November. Up to October to beginning of November, it was still active. We started to negotiate it with customer, but it was soft. You know, we see clear downtrend from end of November till December. We became very aggressive attitude to customers. Finally, we fully negotiated with most of the customer, let's say 95% of customer, by the end of December or beginning of January. That was the impact. If we go back to page six. Page six, this is Q2 versus Q3. Upper side is sales, lower side is profit. You see obvious impact in the middle, appliance commercial industry area. This is caused by that delay, okay? As I said, we finally negotiated fully, and then this will come back in Q4, unless we have an extra increase, and then we may have to push that out to Q1. It may change, but at least this big deficit we created in Q3, that was already concluded, and we will see in Q4. Go back to your questions. Usually, this type of material increase doesn't last long. Sometimes, let's say, six months, sometimes even just one quarter. Then we have enough saving to absorb. This magnetic steel increase, it started from almost one and a half year ago, and then it keep increasing with almost no stop. Mm. You know, general answer to your question, we definitely absorb at least 50%. Because, you know, our saving is getting less and less because this continuing lasting long. From now on, probably we have to request customers to offset this increase, you know, very much. That will continue. Our forecast is this magnetic steel increase will not stop till like 2023, 2024. Discussion may become very harsh with customers, but, you know, we also have to protect our profit. At least we cannot use money to sell. That what we are seeing. Meanwhile, you know, we know this is not sustainable. Now I'm giving pressure to our engineers to choose alternative materials or reduce quantity of this magnetic steels, or manufacturing engineering can increase OK rate from one plate. You know, usually to have a large motor core from one plate, you know, 55%-60% remain, 40%-45% going to scrap. Of course, we get the money to scrap those, but not the original price. Now I'm requesting them to increase this okay rate from current to 55%-60% to like 70%-75%. That will help a lot. End of the day, not only magnetic steel, but also magnetic itself, coppers, aluminums, you know, technology will define cost competitiveness. That's where, you know. That is the area we historically won. This time again, we're pushing engineering to save these situations. Short story short, we want to go parallels. You know, one more price negotiation with customer, as long as this keep increasing. Two more technology to reduce quantity or increase okay rate that we are going to boost. You know, this already continues very long. That is very much painful. Right. Tremendous. Thank you for that very complete answer. That's great. Thank you. Thank you. James, thank you very much. For those who have just joined the conference call, let me repeat how you can ask your question to the company's senior management. Today's Q&A session is being conducted electronically. If you'd like to ask a question, please press star key and one on your touchtone phone. Again, please press star and one if you'd like to ask a question. If you'd like to cancel your request, please press star and two. Now, our next question is from Mark Yim of GAMCO. Mark, please go ahead. Thank you very much for that. I just wanna follow up on the previous question about magnetic steel. Just to confirm, this is mainly an issue in your European operations, or is it pretty much company-wide, the same effect? Okay. Thank you, Mark. Let me reply from Seki. It's global actually, but particularly from Europe. Two reasons, okay? It's highly related with electrifications, you know. Electrification is accelerating, but particularly two major market, one is Europe and one is China. If you look at the North America and Japan and other markets, it's not aggressive as Europe and China. Yeah. Europe electrification ratio, including a plug-in hybrid, December sales is already reached more than 20% among new car sales. Original forecast was around 10% by the end of 2021, so it's almost doubles. It very much accelerated. Obviously, you know, traction motor is large, and then naturally it required a high quantity of magnetic steels. That's one of the reason. The hidden reason is OEM in Europe want to go more for 2022 and 2023. Then they did start reserving, you know, magnetic steel for next year and after next year. That makes it difficult for appliance applications or industrial application to get magnetic steel. Because automotive OEM is, you know, dominating those. And then, of course, for steel companies, you know, high sales with better profit is better. And then I think automotive application require very long process to make it thin, thinner, and then a good price and a good profit for them than appliance application or industrial application. That's happening in Europe. China is supposed to be same, but China has a little more steel capacity than Europe against the demand. That's what Yokota-san explained. It's similar, but the capacity, supply point of view, China has little more room than Europe. Overall, because of that demand, intensive demand in Europe and China, globally, this magnetic steel is showing a shortage. It's coming from Europe. That is the background. Thanks for that. Just, are you expanding your suppliers of magnetic steel or looking into, I don't know, investment in that area yourself over the long term? We have several actions for this. Obviously, we are not going to have a steel mill by ourselves. We cannot control that. One, because globally China has little more room for adjustment, we decided to have a huge import from China to Europe for appliance applications and industrial applications. Of course, that cost a lot, but because European cost is already very high, even paying logistic cost and the import duties, imported from China are almost similar or a little less. So, we sourced up to FY 2022. We need to continue this for probably 2023 and 2024. That's first one. Second, this has not been fully decided yet, but generally speaking, automotive application is thinner than industrial applications. For example, one plate thickness for automotive, particularly traction motor, is let's say 0.25 mm-0.27 mm, while industrial application is, let's say 0.35 mm-0.40 mm. This thickness is created by times of loadings. That means, automotive industry application need more loading times, yeah? Because, steel mill only making, application for, automotive side, very difficult for industry and appliance to get, their standard thickness. What we are studying, you know, it may be become expensive, but supply is more important. They start studying if we can use automotive industry application for appliance and industries. Instead, you know, efficiency become little higher. Let's say, while we usually use 0.150 mm, we may be able to reduce to 0.135 mm with thinner magnetic steel. That's what we are studying. Now automotive is dominating and therefore minor users such as industry applications or appliance application may have to follow automotive standards. That we are studying. Probably we have many other choices and ways of adjustment we have to squeeze out to survive. Okay. Thank you. I'm sorry, just one more question. This is about your acquisition, OKK. Can you explain the background of that? I know you have exposure to machine tools, and you've made M&A in that area, like with Mitsubishi. Why OKK and what is your long-term plan for machine tools? Okay. Maybe I go first and then maybe, Nagayasu-san or Yokota-san, you can add several comments later. First, you know, we believe electrification from automotive side will grow very rapidly. Then, we are very strong to build motors. We are not so strong for gear, you know. When you are thinking of gear for manual transmissions and then gear for EVs, it's very different. Function is same, you know. Transfer rotation power to wheels, yeah? You know, as you have experienced before, manual transmission vehicle is very you know fun to drive, at the same time, very noisy, yeah. No one cares when manual transmission is noisy with the sound from engine too, yeah. Once turning to EVs, very quiet. At least no combustion sounds. Sound from gear become very, you know, noisy. Actually, same or much less noise and vibrations than manual transmission. Because entire sounds and vibration become smaller, that sound from gear become outstanding. To control this, we need a very precise machining and grinding for gear. We hired many experts from gear areas. We finally found that best way is acquire the best quality machine builders. That was Mitsubishi Heavy Industries Machine Tool divisions. Now they are in our hand. Sometimes we found that, you know, to complete this, machining idea, we need not only for gear machining or gear grinding, but also standard machining centers. We also found that this segment way of competition is very soft. Usually, they have a standard price, depending on brand sales power, they have like a ±10% price gap. Because many times they have a trading company to reach final users. Because of those structures of commercial and business, their ranking from number one to number 10 has no change for 40 years. Very, very soft competition. Our Chairman, Mr. Nagamori, determined, let's go into this segment. It's not difficult to get wins. While we have a machine tool, which used to be a part of Mitsubishi Heavy Industries, we decided to find a good machine machining center builders. OKK has a very good engineering and then history, and then assets, but their business was terrible, you know. They had a huge negative profit from 2020 and possibly 2021, therefore, it's not expensive to purchase. That was the background we bought. Also, this combination, machine tool and OKK also help a lot to make reducer for robot as well. Then this is also another one we believe extend very much from future, for future there. While we making these structures, you know, our idea is expanding. Probably we need this company, this company will help a lot to sell in China or USA. We will extend this idea for further. Then, Mr. Nagamori is very energized to make this machine tool division bigger and needed. Go back to your first question. You know, original background, and it's still background, but not to sell outside, but to help internal business such as motor for EV or reducer for robot. That is background. Potentially we can expand this to very strong. Nagayasu-san, Yokota-san, if you have any additional comment? Yeah, just to add, just simple explanation to on top of Mr. Seki explain. Nidec Machine Tool is lineup is for more like larger size of machining center. Of course, one of the benefit that we get is gearing technology. But their product line is mainly on the high-end line. On the other hand, OKK is very good at mid-size or small size machining center. If we really try to be successful in the machining business, we need a product lineup. Because we have to access all of the potential customer in everywhere. We cannot compete only one product in a very wide range of product competition. That's why OKK is very essential to add such variety of lineup on top of Nidec machine tool, which is very good at large size machining center. This is also one of the biggest motivation for us to pursue OKK. Thank you very much. Mark, thank you very much. We have a few more minutes to accommodate some questions. There seems to be a new question from Zach Inoue on MUFG Securities Americas. Zach, please go ahead. Good morning and good evening. Thank you for hosting this timely call once again. I have some questions on your production capacity for your E-Axle. First of all, congratulations on reaching 20,000 mi production last month. On the slide 13, I know you have this capacity to increase to 6 million units in FY 2024. You know, rough calculation, that's about 500,000 units per month. That's, you know, 25 x greater than the last month. My two questions from me, one, based on your current customer inquiries, what is your expected or estimated orders for E-Axle in FY 2024? My second question is, when do you think the orders from non-Chinese auto companies will start to kick in? Thank you, Zach. This is Seki speaking. Let me explain. First, if you are on page 13, you know, please look at the graph on right-hand side. Blue bar is the capacity that you are seeing. Then, green portion is actual current forecast of production volumes. 3.5 million in 2025. Okay? Then we are not showing this green for 2024, 2023, 2022. Your question was 2024, but in 2022 we are seeing about 1 million. Then we are expecting very linear increase from 2022 to 2023, 2024 and 2025. First answer to your question, 2024, probably around 2.8 million or 2.7 million. Yeah. This 3.5 million was a number we announced at the last financial announcement in October. Actually, this 3.5 million already increased to 3.8 million by 300,000. You know, after discussion with Mr. Nagamori, we stopped to announce this volume increase because time by time it's not so impactful. Instead, probably we announce this volume increase by every half a year. Yeah. We didn't explain this time, but probably in April we explain. Time by time, this volume will increase. That's why we are aiming double of capacities, because one day, you know, this prepared capacity will be fulfilled, and even customer want us to supply, we have no room. We know 25% is a breaking point. You know, it looks a very steep curve, but for us, this is still slow. After 25%, speed of increase for electrification will be even more accelerated. Therefore, we need spare capacity to absorb all of those opportunities. That we are aiming, then we set this as a strategy. This strategy is not the first one. We had a very huge success for hard disk drive by the exact same strategies, you know. Prepared capacity first and then demand came next. Yeah. Actually, because we had capacity, demand came. If we didn't capacities, you know, everybody was slow, and we are one of them, and then we probably had to share those demand with our competitors. To repeat that success again, we have this success. Okay? Second question, European customers. I don't know if your question is excluding Stellantis, but we have Stellantis. Therefore, our delivery to them starts from this Q2, coming Q2, 2022 Q2s. Yeah. That's first one. I don't know, we should really count Stellantis as one, but we supply to Peugeot, Citroën, Fiat, and Opel, you know. Now we are discussing with Chrysler as part of Stellantis, and then that will come. Apart from Stellantis, two things I would like to explain. I cannot mention the real name, but last time we explained type, customer type A, B, Cs, you know. A is, you know, stick to be in-house, and then C is non-stick, you know, they automatically outsource. B is like a hybrid, joint ventures, yeah. Stellantis is therefore type B. We are talking about this type A customer. Actually, we don't see clear type C customer in Europe. They are either type A or Bs. Type A customer start drifting to type A dash. A dash means, you know, they stick for final assembly, but they are abandoning to assemble motor itself or inverter itself or gear itself. They purchase motor, inverter, and gearset from outside, and then they keep final assembly in their plant, yeah. They probably institute in-house traction motor. Anyway, we start receiving RFQ for motors and inverters for those. Therefore, after Stellantis, I think those parts business coming into the European side. Another one is, you know, I explained this partially last time as well, but because most of European OEM treating EV as core business, I think they put aside hybrid business. Hybrid business becoming a non-core business from them. They used to build hybrid motor in-house, or at least like a Tier 1 suppliers. Those shifting to us. We are receiving a lot of order of hybrid. Hybrid is a bridging technologies, but it's not disappear for another 10 years, at least. It will not be increased, but I think, as long as it continue at least five years or six years, we can absorb it, and we can get the profit for those. We are receiving many orders for hybrid motors, hybrid inverters in Europe. Is that a good answer to your questions, Zach? Yes, President Seki. Very clear. Very exciting. Yeah. Thank you so much. Thank you. Zach, thank you very much. We still have a few more minutes, and welcome your question. For those who want to direct your question to senior management, please press star one at this moment. Okay, the next question is again from Mark Yim of GAMCO, and this will be today's final question. Mark, please go ahead. Yes. Thanks again. I know this is a difficult topic to discuss, but do you have any comments on the Bloomberg article that appeared on Monday, about Chairman Nagamori and President Seki? Thank you, Mark. You know, what I can tell is, you know, we don't have any gap between the Nagamori-isms or Mr. Nagamori's philosophy and my way. It almost zero gap, even 1 mm, yeah? I'm fully aligning, and personally, I respect him a lot, you know. You know, he's very severe, and then he's my master. It's a very natural master train his, you know, pupil be very strong. I think time by time, he sometimes very harsh to me to put more output. I am okay, you know. He's not telling me any wrong, so we are fully aligning. You know, first of all, I don't know why Bloomberg made that as articles, because Bloomberg is a Tier 1, you know, media. I think, you know, context has many misreadings of our relationships and then, you know, company philosophies. Straight answer to your questions, I think, you know, there are no worries, you know. We are still fully aligned. At this moment, I request him to take care of every job in Japan. While we need, you know, quick turnaround from automotive divisions, key is turnaround in operation in Germany and operation in Mexico. I fully spending my time in Germany and Mexico. Actually, I'm attending this meeting from Germany, yeah. Last week I was in the Mexico. He accepted me to spend more time in this Europe and Mexico. Maybe because I am so absent in Japan, people may feel it's very strange, but everything under agreement between Nagamori and myself, no misalignment. That I want to explain. Okay. Just, what's the issue in Mexico? It's the same. It's the automotive business. We have a very, you know, slow operations in terms of overall efficiencies and scrap rate and people's trainings and qualities and inventories. You know, while we have a very strong Nidec presence in Japan and China, Southeast Asia, it's a bit slow to transfer to Europe and Mexico. I'm retrain my peoples and enhancement of the business and, you know, build basic strengths as manufacturers. That's what we are doing. Mexico is one of operations. Very helpful indeed. Thank you. Mark, thank you very much. Now we'd like to conclude the conference call. I'd like to appreciate for your participation. Should you have any further questions, please do not hesitate to contact Nidec Corporation or your sales representative at Mitsubishi UFJ Morgan Stanley Securities. Again, thank you. Orikasa-san, sorry, before we are fully closing, let me make a final remarks. You know, as Yokota-san explained, you know, our Q3 accumulated sales reaching JPY 1.4 trillion, and then Q3 sales itself is like JPY 0.5 trillion. We updated our sales target last time to be JPY 1.9 trillion. Now it's become very positives. In July, we announced Vision 2025 to be JPY 4 trillion in 2025. As a very fast milestones, I committed JPY 2 trillion by 2022, which is another JPY 0.51 trillion if we land JPY 1.9 trillion this year. JPY 2 trillion is very reachables. Then as we explained through the electrification and robotics, you know, we have lots of sources for further growth. Of course, M&A, particularly machine tool business ideas, it's very active. You know, we will make a committed growth for next year, this year, next year, and then we will approaching what we targeted in Vision 2025. Thanks for your support. At this moment, we have a difficulty of material price and the material supply. It's a very small things. If we look at two-year period or three-year periods, important point is we have enough strengths to grow and then firm strategy to execute. We will be there, and then we will not betray your expectations. That's final remark from me. Sorry, Orikasa. Mr. Seki, thank you very much for your closing remarks. Again, I'd like to thank you for joining the conference call, and you may now disconnect. Thank you, everyone. See you next time. Bye-bye. Thank you.