Electric vehicles (EVs) are no longer novel inventions, but their popularity has surged as the technology advances, the cost per car drops and consumers become increasingly environmentally conscious. The EV industry has only just started revving its clean engines as analysts expect the market to reach 26,951,318 units by 2030, registering a compound annual growth rate (CAGR) of about 21% from 3,269,671 units in 2019.
Of those EVs, automaker Tesla is leading the way, holding a whopping 81% of the U.S. EV market. Despite its recent rocky debut on the S&P 500, Tesla’s share price has ballooned by over 650% in 2020, and the company remains on track to reach $100 billion in revenue by 2025.
But Tesla didn’t rise to the top on its own. Fueling its success have been other companies that deliver critical components to building each of Tesla’s EV models. One of those companies is Simwon America, a tier one supplier of auto frames and body parts for Tesla, and a subsidiary of Myoung Shin Industrial Co. Ltd., a Korean auto parts manufacturing company.
“Simwon America started in 2016 mainly because Tesla wanted its suppliers to begin larger production capabilities in the U.S.,” says Sung Ik Hur, chief financial officer of Simwon America. “The parent company was thinking of expanding at the time, so it was really the right time to invest.”BREX
“It’s a win-win partnership across various fronts,” says CG (Colin) Yoon, senior vice president at East West Bank. “The strategic alliance between Tesla and Simwon America allows for growth to happen between both companies, and because East West Bank helps Simwon America’s banking needs, we’re also part of Tesla’s success story.”
Simwon America initially began with one facility in California to develop its manufacturing line but has been expanding on a global scale through its cooperation with Tesla in the U.S., China and Europe. “We manufacture mainly to Tesla, and while it depends on their EV model, we make a lot of their important auto parts,” says Hur. “I know that for their Model 3 and Model Y cars, we manufacture and supply more than 50 different parts.”
But as Tesla’s demand grew and they suddenly needed a large inventory of electric motors, Simwon America had to find a second building and receive equipment financing quickly. “We needed large capital to invest in making these motors for Tesla,” says Hur, “and thanks to East West Bank and Colin Yoon’s long-time relationship and insight with both Simwon America and our parent company, the financing came through.” Simwon America was able to secure a second building across the street from its first facility and receive equipment financing from East West Bank.
“We manufacture mainly to Tesla, and while it depends on their EV model, we make a lot of their auto parts.”
With talk of Tesla moving its headquarters out of California and CEO Elon Musk announcing his move to Texas, Simwon America is also looking at facilities and opportunities in the Lone Star State. “Wherever they go, we go,” says Hur.
Simwon America works exclusively with Tesla, but its parent company, Myoung Shin Industrial Co. Ltd., supplies parts to various other automotive brands such as Hyundai. “Myoung Shin is a publicly traded company with a sales revenue of almost $1 billion,” says Yoon. “They have a very strong presence in Korea and China, and as a global auto parts manufacturer, they’re also expanding their presence in Europe, and, of course, here in the U.S.”
While there are subsidiary companies that act autonomously in countries outside of their parent company, Myoung Shin Industrial Co. Ltd. and Simwon America work as a single unit. “We are 100% owned by Myoung Shin, and we work very closely together,” says Hur. “There’s frequent cross-border communication between Myoung Shin and Simwon America, and I think that the biggest challenge we have in working together is just the time difference.”
“There’s frequent cross-border communication between Myoung Shin and Simwon America, and I think that the biggest challenge we have in working together is just the time difference.”
The global EV market was valued at around $162 billion in 2019, and that number is expected to surge to an estimated $802 billion by 2027. While there may be a lack of existing EV infrastructure today such as charging stations, investors and automakers believe that higher adoption of these cars will inevitably solve this problem. Companies like Uber have already set goals to become completely emission-free by 2040.
“I think that the demand for fuel-efficient, high performance and low-emission vehicles will grow stronger,” says Hur. “And Tesla is going to continue growing as a leading company in the EV industry. Our company will also grow with its success.” Tesla is undoubtedly a heavy hitter in the EV market, but others aren’t too far behind, from Chinese EV automakers like NIO, Xpeng and Li Auto, to established companies like Audi, BMW and even Apple.
The country with the most EVs per capita is Norway, followed by the Netherlands. But China takes the EV market cake by sheer population size, with 1.28 million EVs on the road. By late 2022, an estimated 40% of Tesla’s unit sales are most likely going to come from China’s market, especially with tax credits and federal support from the Chinese government for the EV industry.
“Tesla is expanding its other programs, and Simwon America is going to be working as a strategic supplier,” says Yoon. “This long-term partnership is exactly the type of win-win model we look for, and there’s so much potential for continued symbiotic growth. As such, I feel proud that we are supporting foreign direct investment and being a part of Simwon America’s success story.”