Electric vehicle component maker Sevcon says its future has never looked brighter, after unveiling ambitious growth plans, including possible acquisitions.
After over a year of rapid growth, executives at the Gateshead-based firm are looking to seize opportunities provided by the growing electrification, on-road electric and hybrid vehicle sectors.
Sevcon believes electrification has reached a tipping point, with the world’s largest vehicle makers scaling-up their plans for low-emission products as national governments toughen up environmental regulations.
The Chinese market, in particular, has been singled out for special attention as district and national authorities step up efforts to cut emissions in its smog-bound cities by penalising internal combustion engine users, in favour of electric vehicles.
Sevcon president and chief executive Matt Boyle said: “Our key strategic challenge is scaling the business to capture this opportunity on a timely basis, which we may accomplish organically or through acquisitions of other businesses, or both.
“Meeting this challenge means that we will need a stronger balance sheet to fuel accelerated growth. We are considering raising equity capital by means of a rights offering or other approach, and we are developing a capital allocation and investment strategy that will help us to achieve our goals.”
Sevcon’s keen interest in the Chinese market has led to the creation of joint venture with a subsidiary of a Chinese tier one automotive supplier, Risenbo Technology.
Operating as Sevcon New Energy Technology, the new joint venture company began trading earlier this month, targeting the Chinese on-road electric and hybrid vehicle market.
Boyle continued: “Our new business pipeline has never been stronger. In China its air quality programmes are driving the growth of both two and four wheel electric vehicles.
“Our Chinese joint venture partner is established and respected player, with strong links to the country’s tier one automotive suppliers and this put us in a great position to serve the growth of the electric vehicle on road market.”
Sevcon, which has grown its employee headcount from 93 to 115 during the past year, produces a range of motor controllers for electric and hybrid vehicles.
These are used to vary speed and movement, to integrate specialized functions and to prolong the shift life of a vehicle’s battery.
The company sells to manufacturers of on and off-road vehicles, including cars, trucks, buses, motorcycles, fork lift trucks, agricultural farm tractors, aerial lifts and mining vehicles.
Although listed on the NASDAQ, Sevcon was launched in the Team Valley, Gateshead, over 50 years ago.
The company, which is still based there today, has now become a global player, with factories in China, Mexico and Poland.
As well as boosting its staff number’s, the firms’ revenues for the six months to March 31, 2014, amounted to $18.2m (£10.7m), compared with $14.7m (£8.6m), in the first six months of 2013.
Profits came in at $906,000, (£534,000) compared to an operating loss of $1.6m (£940,000) in the same period last year.
Boyle added: “In Europe we are encouraged by the growing interest in hybrid and electric vehicle technologies and by strengthening our presence on the continent we are making significant progress. In Germany, for example, two potentially significant opportunities have emerged since we opened an office last year.
“This worldwide electrification movement is prompting our ambitious research and development agenda, leading to the recruitment of new sales and engineering staff and the securing of a number of new patents.
“We are in a growth-mode strategically and this has been encouraged by positive economic comments from most customers across our worldwide markets. The future has never been brighter for Sevcon.”
He added that he believed the market will begin a “meaningful shift” towards larger electric and hybrid vehicles, an “inflection point” that may be closer than many people think.
“Our product roadmap has the potential to put us in the sweet spot for this next phase of electric vehicle market growth,” he said.
The company expects to make further announcements on its growth strategy over the coming months.