TEP Story Archives: The Largest Japanese Manufacturer of Electric Motorbikes in Only Two Years

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Mr. Toru Tokushige
CEO of Terra Motors Corporation/TEP Member

Leading a once-in-a-century revolution

In 2011, when big companies were fiercely competing in the market for two-wheeled electric vehicles (EVs), a two-year old venture company became the largest manufacturer in Japan. That company is called Terra Motors Corporation (Terra Motors), and it has only 12 employees.

The EV industry is growing rapidly and it is said that its market will be worth 10 trillion yen in 2020. EVs are being backed by national governments around the world thanks to their low environmental impact. Electric motorbikes are no exception, and the Japanese market for these vehicles has doubled in five years.

"A once-in-a-century automobile revolution is taking place, and venture companies are at the frontline," says Mr. Toru Tokushige, CEO of Terra Motors. After graduating university, Mr. Tokushige started working at a Japanese life insurance company. Not wishing to spend his entire life as a white-collar worker, he went to the United States to obtain an MBA. He then represented an incubation company in Silicon Valley, where he witnessed the birth of many EV venture companies.

"Venture companies are better suited to EVs," says Mr. Tokushige. EVs can be made with one quarter of the parts required for a gasoline vehicle, and they do not require a large manufacturing line. The structure of the automobile industry is vertically integrated and limited by manufacturer affiliation, but with the EV industry, the required parts can be ordered from various manufacturers and assembled. That means there is plenty of potential for venture companies to enter the industry. Conversely, large companies are burdened by the enormous manufacturing lines required for gasoline vehicles and are not able to flexibly perform product development and capital investment. In a rapidly growing industry crowded with venture companies, a lack of speed can be fatal.

Terra Motors aims for "quad-speed management." "Working twice as much with twice the quality. I want us to lead the market with tremendous speed," says Mr. Tokushige.

Targeting the Asian market

Mr. Tokushige has a vision: creating the first global venture company from Japan. While assisting venture companies in Silicon Valley, he felt a sense of crisis due to the lack of Japanese companies he saw.

It was the year 2009. An emerging Google was conquering the world. Mr. Tokushige looked at Japan and felt a sense of frustration. "In Japan, global companies are invariably large companies. But overseas, it is normal to see global venture companies. I want to change that," he thought, as he decided to start his own company. Despite becoming the largest EV manufacturer in Japan in a mere two years, he says "Japan is only a stepping stone," as he looks toward the future.

Terra Motors is currently targeting the Asian market, which accounts for 80% of the global market for two-wheeled vehicles. Gasoline motorbikes are widespread and clog main roads every day. Exhaust gas and noise caused by two-wheeled vehicles are a common problem amongst Asian countries.

EVs are one solution promoted by governments. The Chinese market in particular has seen tremendous growth of electric motorbikes, where sales have grown to 20 million units from 270,000 units in 2000. Dozens of companies have entered the market, which has led to fierce competition.

"The Asian market requires the best in both quality and price. The speed of decision-making is also much faster than in Japan," explains Mr. Tokushige. In the summer of 2011, Terra Motors dispatched an employee to be stationed in Vietnam. The company is rapidly expanding in the Southeast Asian market.

Trust formed by a network of senior managers

Although Mr. Tokushige seems unstoppable now, he was initially troubled by the nature of the motorbike market when he started his company. Many dealers are already in a network with major companies and Terra Motors was often turned away. Looking back, he remembers it was a network of trust that enabled him to continue his struggle despite a lack of market recognition and being ignored by his customers.

It was Mr. Masaru Murai, the director of TX Entrepreneur Partners and friend since his days at Silicon Valley, who placed his trust in Mr. Tokushige. Mr. Murai is now a shareholder of Terra Motors and provides the company with periodic advice.

"Receiving assistance from someone who is trusted by society enabled the company to gain trust. Simply having the name of Mr. Murai on the shareholder list changed the way that people looked at our company," says Mr. Tokushige, who has now experienced how much that trust can help on many occasions. There were also times when an introduction from Mr. Murai led to big business deals.

"Sharing my vision with Mr. Tokushige and building a relationship of trust is exactly why I was able to provide such powerful and effective assistance," says Mr. Murai. Terra Motors supporters continued to increase, and by the end of 2011 he had succeeded in raising 328 million yen. Shareholders include Mr. Koichiro Tsujino, former president & CEO of Google Japan Inc., and Mr. Nobuyuki Idei, former CEO of Sony Corporation.

"Trust breeds trust. Now it wouldn't be difficult to raise another billion yen," asserts Mr. Tokushige.

Becoming a global venture company from Japan

Terra Motors is accelerating as a venture company that aims to take on the world. Surprisingly, the average age of its employees is in the early 20s. The employee in charge of the overseas market is only in his first year of employment after university.

"Working here for one year is equivalent to experiencing five years at a major company," says Mr. Tokushige. The company's main focus is on human resource training. By employing young human resources, they can focus on strategy planning and product development that will take the company to the next stage. Clarification of employee roles further accelerates the speed of management.

Terra Motors is supported by a small team of young and able employees, experienced outside advisors, and the knowledge and capital of its shareholders. This support network crosses generational boundaries and is nationwide. The company will continue on its path to becoming the first global venture in Japan.

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