Hitachi Integrated Report 2022

Digital Systems & Services

Whatʼs Hitachi

Introduction
Green Energy & Mobility

Connective Industries

Value Creation Initiatives

Hitachi Astemo
We will contribute to a sustainable society
and improved quality of life by providing
world-leading advanced mobility solutions
that satisfy our customers

Value Creation
Hitachi Astemo

Strategies by Sector

Business Strategies

Sustainability

Corporate Governance

Data70Hitachi Integrated Report 2022

Digital Systems & Services

Introduction
Green Energy & Mobility

Whatʼs Hitachi
Connective Industries

Value Creation

Business Strategies

Sustainability

71

Data

Hitachi AstemoHitachi Astemo Business Structure
OthersCorporate Governance

Results and Forecasts

2% ・・Software
Aftermarket

・ICE*1

Powertrain & Safety
Systems Business

39%

Revenues (billion yen) /Overseas Ratio (%)

Adj. EBITA (billion yen)
Adj. EBITA ratio (%)
ROIC (%)

Engine Control Unit for Direct Injection

Motorcycle Business

19%・Brake・Suspension

Disc Brake
Caliper

11.0

Front Forks

FY2021
Revenues

・xEV*2

1,597.7

3.5
Inverter

Motor

AD*3 ECU*4

StereoCamerabillion yen

2,000

1,800・AD/ADAS・Powertrain

DiscBrake
Caliper

9.0*1 ICE: Internal Combustion Engine *2 xEV: Electric Vehicles*3 AD: Autonomous Driving *4 ECU: Electronic Control Unit

40%

Chassis Business・Brake

1,597.7/
72%

5.2

3.9
・Drivetrain

Propeller
Shaft・Steering

Electric Power
Steering
System・Suspension

Frequency
Reactive Damper
Hydraulic

62.3

Strengths
Regarding powertrain and safety systems, we leverage advanced inverter and motor technologies honed
through years of market experience to develop highly efficient electric axles with integrated gearboxes.
Further, to realize autonomous driving, we provide core advanced technologies such as sensing technologies
centered on stereo cameras, electronic control units and control software. In the chassis field, we willrealize integrated vehicle control solutions for next-generation mobility by leveraging Hitachi’s strengths inelectronic and electrified brake suspension and steering products to link and control them as a system. In themotorcycle field, where we boast the world’s top market share, we will lead advances by providing systemproducts for powertrains, suspensions and brakes, leveraging our advanced technological capabilities andexperience, including integrated vehicle control, driver assistance and control technologies for EVs. We will
establish Hitachi as a global mega-supplier for automobiles and motorcycles by combining the wisdom of ourdiverse 90,000 employees at 359 bases spread across 26 countries and regions. (As of July 2022)

5.1

FY2021(result)

92
FY2022(forecast)180
FY2024(target)Mid-term Management Plan 2024: Vision
Hitachi Astemo aims to realize a sustainable society by providing cutting-edge mobility solutions.
Specifically, we will provide environmental value by helping to realize a better global environment
through highly efficient, internal-combustion engine and electric powertrain technologies that
improve fuel efficiency and lower electricity costs. To create social value, we will improve safety
and comfort through integrated vehicle control technologies, using autonomous driving (AD)and advanced driver-assistance systems (ADAS) and advanced chassis systems. In addition,
we will utilize Lumada to advance mobility by realizing software-defined vehicles with in-vehicle
software enabling advanced control, and over-the-air (OTA) update technologies for variouscontrol software. Through these efforts, we will create economic value totaling two trillion yen inrevenues with an adjusted EBITA margin of 9% and ROIC of 11% by fiscal 2024.

Hitachi Integrated Report 2022

Digital Systems & Services

Whatʼs Hitachi

Introduction
Green Energy & Mobility

Connective Industries

Value Creation

Business Strategies

Sustainability

Corporate Governance

72

Data

Hitachi Astemo

Hitachi Astemo Sector Growth Strategy
Business Environment
As carbon neutrality efforts accelerate around the world, the automotive and motorcycle
industries are undergoing a once-in-a-century transformation, with competition intensifying in
the Connected, Autonomous, Shared, Electric (CASE) fields.
In response to these market changes, the ratio of internal combustion engines (ICEs), whichhave been the mainstream up to now, is expected to decline in the next few years amid asignificant shift towards xEV-related products (motors, inverters and electric axles).
With demand for safe and autonomous driving technologies on the rise, vehicles are increasingly
equipped with sensors that recognize the physical world to facilitate AD and ADAS. At the sametime, advanced technologies that recognize the physical world are advancing through the use of
infrastructure coordination systems that leverage communication technologies.
In the chassis area, EV and autonomous driving solutions are in demand for advanced vehicle
behavior control systems, facilitating the electric control of brakes, suspension, steering andother components.
In the motorcycle sector, demand is expected to continue growing in Asia—including India,
the largest motorcycle market in the world—while electrification demand is increasing due toheightened environmental awareness.
At the same time, there is an urgent need to stabilize production by overcoming increasingly
complex risks such as semiconductor supply shortages and the impact of COVID-19 on thesupply chain.

Growth Strategy
To support CASE and increase market share, we will focus on developing AD and ADAS,
advanced chassis and xEV-related products such as motors and inverters. For xEV-related
products, we will invest 300 billion yen, including R&D expenses, by fiscal 2025 to ensurecompetitiveness. We will also leverage Hitachi Group R&D resources and engineering
technologies possessed by Lumada and GlobalLogic to strengthen software development
capabilities and create new advanced solutions for realizing software-defined vehicles.
We will contribute to improving QoL, realize a sustainable society, and strive to attain aleadership position as a global mega supplier. This will be achieved through digital solutions,improving safety and comfort mainly in the areas of autonomous driving and connected cars;
green solutions that contribute to the global environment through electrification products andtechnologies that reduce emissions; and innovative solutions that anticipate the changes that will
occur in the mobility field by 2050.

Regarding the creation of synergies from business integration*, we will maximize corporate value
through the integration and optimization of our product portfolio and footprint as well as throughoperational improvements. Although semiconductor shortages are expected to persist, we willtake focused measures to ensure stable procurement and delivery, including the securing of
long-term contracts with customers.
*Hitachi Automotive Systems, Keihin Corporation, Showa Corporation, and Nisshin Kogyo Co. were integrated as
Hitachi Astemo in January 2021.

Provide advanced mobility solutions that contribute to building a sustainable society
Social value

Environmental value

Improve safety, comfort and QoL
with AD/ADAS systems
and advanced chassis

Contribute to a greener world
through efficient electrification
technologies and products that
improve emission reductions

AD/ADAS

Advanced environment recognition
Integrated electronic control

Connected car technologies
Onboarding devices and software

A technology company
making the world
a better place

xEV

Advanced electric powertrain package

Advanced Chassis

Integrated vehicle movement control

Economic value
Stereo Camera

A commitment to achieve 2.0 trillion yen in revenues;
9% adjusted EBITA margin; 11% ROIC in FY2024

MotorHitachi Integrated Report 2022

Digital Systems & Services

Introduction
Green Energy & Mobility

Whatʼs Hitachi
Connective Industries

Value Creation

Business Strategies

Sustainability

Corporate Governance

Data73

Hitachi Astemo

Business Strategy
The development of next-generation vehicle components (xEV, AD and ADAS, advanced
chassis, next-generation motorcycles) is the mainstay of Hitachi Astemo’s growth, thus we willprioritize investment in this area.

Powertrains
With powertrains, the key will be to expand mass production of xEV motors and inverters anddevelop new technologies for more efficient and compact e-axles. In fiscal 2021, Mazda’s firstmass-produced electric vehicle adopted our motors and inverters. We also provide powertrain
products to many customers, including China’s Geely Automobile Group, which uses Hitachi
inverters in its hybrid powertrains.
Hitachi Astemo has developed compact, high-output inverters that are easy to install, reduce
power loss to enhance energy-saving performance, and achieve a 50% size reduction comparedto our previous products. In fiscal 2019, we commenced mass production of the world’s firsthigh-voltage (800 V) high-power inverter for EVs utilizing Hitachi’s proprietary direct water-cooled,double-sided cooling technology. Moreover, our motors—which take advantage of the advanced
analysis technologies, structural designs, material developments, production technologies andmotor control technologies cultivated within the Hitachi Group—achieve more than 1.2 times theoutput torque per magnet volume compared to the competition. Hitachi Astemo’s strengths also
lie in its ability to make e-axles smaller and lighter by utilizing model-based technologies in the
optimized design of compact and lightweight e-axles integrating motors, inverters and gears.
In addition, we established Hitachi Astemo Electric Motor Systems to strengthen the mass
production of motors, with mass production systems now operational in Japan, China and theUnited States. Hitachi Astemo will expand its product lineup, and together with the developmentof advanced technologies that include new materials and software and the strengthening of costcompetitiveness, aims to capture the top market share in both motors and inverters.

Safety Systems
Hitachi Astemo also leverages its strengths in the development of sensing and information processing
systems required for realizing autonomous and connected vehicles. In fiscal 2021, Suzuki’s newWagon R Smile used our stereo camera with nighttime pedestrian detection capabilities. Honda’s
new Legend, a vehicle equipped with Level 3 autonomous driving launched in 2021, was equippedwith an OTA-compatible electronic control unit for autonomous driving, developed by Hitachi
Astemo. Leveraging Hitachi Group technologies, this autonomous driving system offers a one-stopsolution, from data centers where software updates are distributed, to vehicle-side equipment.

Hitachi’s OTA solution enables highly efficient and secure software updates leveraging its proprietarydifferential data update technologies and expertise in information security through wireless datacommunications. In linking this OTA solution with Lumada’s digital solutions, it is possible toautomatically update software based on optimal solutions derived from AI analysis of big data.
For example, by collecting and analyzing real world information obtained from vehicle onboard
control units and sensors from each system in multiple autonomous vehicles, it is possible toupdate the control software for safer autonomous driving. To promote advances towards softwaredefined vehicles, we are also promoting the transition from domain-type electrical and electronic(E/E) architecture, in which mechatronic control systems are separated for each of several major
functions, to zone-type architecture, in which the vehicle is a single system.
In the future, Lumada will be linked to driving and vehicle behavior data acquired from on-board
control systems that can be used for predictive maintenance, advanced safety and comfortable
driving, and personalized services that anticipate user needs.

CloudOTA

Datacollection

Security・Firmware
・Maps

Vehicle security
operationcenter

Servicesfor EV

Communications
Integrated ECUs
AD/ADAS

Parking

Front-endzone ECU

MPU

C2X

Body

Left-sidezone ECU

Electricpower steering

Integratedvehicle
control

IVI

Right-side
zone ECU

Rear-endzone ECU

Electricbrakes

Camera
Radar
LiDAR
Sonar
Sensors

Electricsuspension

Electric powertrain(motor, inverter, and battery)

Diagnosis

Servicesfor AD

Hitachi Integrated Report 2022

Digital Systems & Services

Introduction
Green Energy & Mobility

Whatʼs Hitachi
Connective Industries

Value Creation

Business StrategiesSustainability

Corporate Governance

Data74

Hitachi Astemo

ChassisTo improve vehicle safety, it is important to advance chassis components that perform basicvehicle functions such as driving, turning and stopping. Leveraging strengths in the in-housedevelopment of brakes, suspension and steering systems, Hitachi Astemo contributes torealizing autonomous driving by converting these systems into electronic and electric devices,then linking and controlling them to integrally work in conjunction with AD and ADAS systems.
Utilizing suspension system technologies that facilitate a comfortable ride and stability, we jointly
developed a shock absorber with AISIN, which was adopted by Toyota’s new Land Cruiser,
unveiled in June 2021. For brake systems that improve vehicle safety and fuel efficiency, weoffer a wide range of products, including a regenerative braking system compatible with electricvehicles. In the area of steering systems, our products provide a high level of responsivenessand operability to meet the electrification needs of automobiles as well as a wide variety of otherapplications.

Motorcycles
One of Hitachi Astemo’s pillars is products for small motorcycles, which are a mainstay of daily
life in the Indian and Asian markets. We will respond to future increases in demand for advanced
technologies, including the expansion of midsize motorcycles and electrification offerings. We
will increase our share of the global market by leveraging Hitachi Astemo technologies andquality, providing products with specifications and cost competitiveness suited to market needs.
Starting with integrated vehicle control technologies, we will leverage advanced technologies
and a wealth of experience in driver-assistance and EV control technologies to contribute toadvances in next-generation motorcycles that realize environmentally friendly vehicle safety,handling stability and ride comfort.
Specifically, we apply Hitachi Astemo technological expertise and promote technologicalinnovations, including the electronic control of brakes and suspensions, and electronic fuelinjection systems that comply with emission regulations around the world targeting a wide rangeof displacements, from small to large, and powertrain systems facilitating electrification. We will
also develop suspension systems that provide high handling stability and riding comfort, brakingsystems that provide stable, reliable braking with a high level of safety and comfort, and driving
support systems that contribute to the safety of motorcycles.

Synergies from Business Integration
We are also accelerating the creation of synergies through the business integration of Hitachi
Automotive Systems, Keihin, Showa and Nisshin Kogyo, which was completed in January 2021.
With this integration, we will establish a solid management foundation through structural reforms

that include optimizing business locations and reducing procurement costs through centralizedpurchasing, efficiently allocating combined resources, integrating talent and fostering a newcorporate culture while investing in higher-growth, higher-profit areas.

Strengthening Software Development
Hitachi Astemo meets the needs of automakers around the world by incorporating optimal
software in its globally deployed products and systems. As the car itself now functions as a highperformance computer, the performance of in-vehicle software is directly related to creating newvalue and safe autonomous driving technologies. In April 2019, Hitachi Astemo enhanced its
software development capabilities with the establishment of the Software Division to make useof its software developers. Additionally, through the acquisition of in-vehicle equipment softwaredeveloper seneos (Germany) in April 2020, we have strengthened our front-end engineering
capabilities to facilitate efficient software development. Further, approximately 170 digital talent
within the Hitachi Group have transferred to Hitachi Astemo to promote digitalization business.
With Lumada at the core, we expect to realize synergies from GlobalLogic’s engineering andsoftware development capabilities.

Investment Plan
We will invest approximately 300 billion yen, including R&D expenses, in xEV-related productsby fiscal 2025, collaborating globally with Hitachi, Ltd.’s R&D divisions including use of theirresources. As an example, in areas such as connected solutions, Hitachi Astemo will conduct
R&D on the in-vehicle device side, while Hitachi, Ltd. will conduct R&D on the cloud side—
effectively separating the areas of R&D and resource allocation.

Risk Management
While EVs are expanding as part of efforts to realize carbon neutrality, ICEs are expected toshift from an upward to downward trend in the next few years. In response, we will optimize ourportfolio with changes in the business environment while shifting resources, redeveloping andretraining the professional skills of our human capital over the long term as needed.
Regarding concerns about semiconductor supply shortages, we will secure long-term contracts
with vehicle manufacturers for parts delivery and share Hitachi’s long-term planning with them tomitigate risk of shortages.
For parts procurement risks due to pandemic-related regulations in the COVID-19 era, we will
work with our global networks and supply chains to mitigate risks and overcome challenging
conditions while minimizing adverse impacts.