Tesla's vegan leather supplier is betting the material will be used everywhere

Tesla’s vegan leather supplier is betting the material will be used everywhere

Noboru Yoshimura’s goal is to make the company’s name synonymous with synthetic leather.

For Ultrafabrics Holdings Co. , the provision of seat materials to Tesla Inc. and United Airlines Holdings Inc. And furniture makers is not only good for the environment, it is a profitable, albeit challenging, business.

The goal of Noboru Yoshimura, 60, the president of the Tokyo-based manufacturer, is to make the company’s name synonymous with synthetic leather. “More and more people are using our skins,” he said in an interview. “We consciously develop premium products, and this strategy is in keeping with the times.”

For years, treated cowhide or sheepskin leather was viewed as an excellent choice for car buyers. Now, environmentally conscious consumers are looking for products that do not involve animal slaughter, such as plant-based meats. Airlines are turning to leather-like materials to take advantage of their lower weight to save fuel and reduce carbon emissions. As a result, the global synthetic leather market is on track to reach $67.2 billion by 2030, according to Straits Research.

Investors seem to agree on the opportunity for Ultrafabrics, which has not fully disclosed its client list. After a grueling year in 2020, when the pandemic wreaked havoc on the global auto industry, the company’s stock has tripled as sales and profitability recover. Ultrafabrics expects operating profit of 2.7 billion yen ($18.7 million) on sales of 18.6 billion yen for the fiscal year through March, while analysts expect, on average, 3 billion yen in profit and 19 billion yen in revenue.

Shares of Ultrafabrics rose 2% in early morning trading in Tokyo on Friday.

In its previous incarnation, Ultrafabrics was Daiichi Kasei, a material supplier who created a material that is strong, flexible and lightweight, while as soft as genuine leather. Four layers are sewn together to create a leather-like texture, combining the backing fabric, the shape, the cushion layer and the final protective film.

While vegan leather may appeal to consumers and help reduce weight penalties for airlines, the majority of the materials are made of polyurethane chloride and plastic-based polyurethane, raising questions about whether production and disposal are good for the environment. There are some variants that use cork, bark, or apple peel.

After merging in 2017 with US-based Ultrafabrics, the combined entity changed its name and maintained a listing in Japan. Daiichi Kasei’s old operations are the backbone of manufacturing, while what was originally Ultrafabrics oversees marketing and sales.

Electric cars are a major driver of growth, because many environmentally conscious buyers tend to be concerned about the use of animal products in cars. Responding to calls to make its cars “completely vegan,” Tesla has been using synthetic leather since 2016. Other companies are following suit by including the material among seat options, as in the new Range Rover SV.

“Electric vehicle makers like Tesla are increasing their use of synthetic leather,” said Katsuhiko Ishibashi, an analyst at Ichiyoshi Research Institute Inc..

When Yoshimura travels outside Japan to promote Ultrafabric products, “The first question they ask me is what is your sustainability story?” He said in a recent lecture at the International Christian University on the outskirts of Tokyo. The challenge is to take a product that resonates with socially and environmentally conscious consumers and build a profitable business out of it.

Yoshimura said China and Japan are the two markets where this drawback is manifesting, and they are seeing less expansion of synthetic leather products. While consumers in the United States and Europe are embracing alternative materials, “only Japan and China believe that genuine leather should be available as an excellent option,” he said.

“That’s why I feel such a great sense of urgency,” Yoshimura said. “There is still a feeling that sustainability is an excellent option, but it will likely become a necessity in the not too distant future.”

#Teslas #vegan #leather #supplier #betting #material

Leave a Comment

Your email address will not be published. Required fields are marked *