As the pace of electrification accelerates in the global automotive market, and various governments worldwide implement subsidy policies that encourage consumer EV purchases, sales of new energy vehicles（NEV, which includes BEV/PHEV/FCV）are continuing to rise as well. NEV sales for 2021 are projected to reach 4.35 million units, a 49% increase YoY.

Due to the vast scale of the Chinese market, as well as domestic policies favorable for the growth of BEV/PHEV/FCV, various NEV brands have quickly emerged in China in recent years, such as BYD Auto, Aion（formerly GAC NE）, and BAIC BJEV. At the market’s peak, NEV manufacturers in China once numbered in the hundreds, although that number has since dwindled somewhat, as the intense competition resulted in declining sales and market shares for many automakers, including BAIC and JAC.

Four rising stars among emerging NEV manufacturers in China include NIO, XPeng, Lixian（or Li Auto）, and Weltmeister, all of which have been shipping tens of thousands of mass production vehicles each year. In particular, while NIO, XPeng, and Lixiang registered significant growths in the past few years, Weltmeister also ranked number two in terms of sales in 2019, though it fell to fourth place in 2020 as it delivered fewer vehicles compared to the top three competitors last year.

In light of the aforementioned four automakers’ current expansions, TrendForce has summarized several key aspects of their growths, including the following:

1. Autonomous Driving Technologies: Autonomous driving is not only part and parcel of these automakers’ core competencies but also a reflection of what consumers and investors expect of the automotive industry. In pursuing advanced autonomous driving technologies, the four automakers have been adopting increasingly powerful processors and computing platforms, with Nvidia being the most common partner among emerging NEV manufacturers. Remarkably, XPeng stands out as the only player making a noticeable effort to develop in-house chips.

2. LiDAR: LiDAR is integrated into an increasing number of vehicles in response to the growing demand for advanced self-driving functionalities. Although LiDAR remains out of reach for vehicles in certain price segments, autonomous driving sensors including LiDAR are no longer limited to flagship models since new NEV models’ E/E architectures are expected to be compatible with OTA updates.

LiDAR sensor demand from NEV manufacturers has significantly increased because only by pre-installing  hardware ahead of time in their vehicles can automakers enable autonomous driving functionalities as a paid subscription service through OTA updates later on.

3. Battery-swapping: Battery-swapping are relatively attractive for the Chinese NEV industry for several reasons: First, battery-swappable vehicles are excluded from China’s NEV subsidy limits*; second, automakers can now afford to lower the retail price of vehicles by turning batteries into a subscription service; finally, it’s much convenience for driver because battery swapping is faster than battery charging.

For instance, NIO’s entire NEV lineup is compatible with both battery charging and battery swapping. NIO has been pushing its BaaS（battery as a service）and  second-gen battery swap stations since 2020. On the other hand, Weltmeister and XPeng are also making their respective battery-swapping strategies.

4. Capacity Expansion and Overseas Strategies: The aforementioned four automakers all place a heavy emphasis on both expanding their production capacities and growing their overseas market shares. Their capacity expansion efforts include building in-house production lines, acquiring other facilities, or jointly funding automotive production with OEMs/ODMs. Regarding overseas expansion, their primary destination is the European market, which is relatively favorable to NEVs.

For instance, NIO and XPeng choose Norway as their first target market in Europe. However, while the European automotive market is conducive to the growth of NEVs in terms of both policies and cultures, competition among automakers is also correspondingly intense. In addition, most European countries prefer either domestic brands or other European brands. Therefore, Chinese automakers must prioritize gaining consumer trust via establishing a trustworthy brand image.

*China’s subsidies for NEV purchases are restricted to NEVs with a retail price of CN¥300,000 and under. However, NEVs with swappable batteries do not fall under this restriction.

（Cover image source: Unsplash）

As the pace of electrification accelerates in the global automotive market, and various governments worldwide implement subsidy policies that encourage consumer EV purchases, sales of new energy vehicles (NEV, which includes both BEV and PHEV) are continuing to rise as well, according to TrendForce’s latest investigations. NEV sales for 2021 are projected to reach 4.35 million units, a 49% increase YoY.

TrendForce indicates that electrification, smartization, and automation are the three key determinants of the ongoing transformation taking place in the automotive industry. Guided by these three determinants, not only are the strategies, business models, and competitions of automakers transforming, but the automotive supply chain is also changing and expanding. Upstream component suppliers and downstream manufacturers alike are now operating in accordance with new paradigms.

High potential for NEV growth entices emerging competitors to enter the market

Now that the competition between traditional and emerging automakers in the NEV market is gradually intensifying, traditional automakers have begun releasing BEVs that are based on purely electric platforms rather than preexisting ICE vehicles. However, for the vast majority of mainstream automakers, NEV sales account for less than 10% of their total car sales. These automakers are therefore placing a top priority on expanding the lineup and sales volume of their NEV models. Emerging automakers, on the other hand, are instead focusing on expanding their production capacities, and Tesla as well as Chinese brands (including NIO and XPeng) have made their respective capacity expansion plans.

NEV sales currently account for only 5% of total automotive sales. As such, not only does the NEV market still have high potential for growth, but this potential has also attracted new players, which are mostly consumer electronics and IoT vendors such as Xiaomi and OPPO, to enter the market. Given their lack of competencies in developing and manufacturing whole vehicles, these companies are instead acquiring existing automakers or utilizing ODM services. Therefore, automotive ODM services are likely to ramp up going forward, while automakers and ODMs will continue building factories via joint ventures, sharing their technologies, and jointly developing NEV models.

As software and hardware technologies improve in the automotive industry, cars now have an increasing number of smart features in response to the demand for user friendliness; for instance, the Car2Home ecosystem was created as a natural extension of V2X (vehicle-to-everything) technology. Advances in automotive systems and technologies, however, do little to assuage prospective car buyers’ fears of instant depreciation and maintenance fees, which are both justified and frequently parroted by existing owners.

Recent years, however, have seen the emergence of a new technology known as OTA (over-the-air) that can at least address car buyers’ maintenance-related worries. Automakers can fix software issues in the car with OTA updates, thus saving the driver the time and effort it takes to perform a factory maintenance. Simply put, OTA is a cloud-based service that allows automakers to perform a host of actions, including software/firmware updates, OS upgrade, issue fixing, and security patches, through a cloud-network-car connection.

As such, OTA technologies are highly dependent on data encryption, decryption, and transmission, meaning OTA services involve not only software and cloud services vendors, but also cybersecurity companies as well. According to TrendForce’s investigations, about 72% of new cars sold in 2025 will be OTA-enabled vehicles thanks to advancements in V2X, automotive electronic/electrical architectures, and intra-vehicle communications.

OTA pioneer Tesla kicked off its OTA strategies in 2012

Tesla is perhaps the impetus responsible for the surge in OTA viability in the automotive industry. Elon Musk believes that cars should be appreciated, as opposed to depreciating, assets for the consumer. As part of that belief, all Tesla models are capable of OTA updates of software and firmware, reflected in Tesla’s revenues from “service and other”, which saw yearly growths from 2016 to 2020 (Tesla’s 2020 earnings from “service and other” alone surpassed US$2.4 billion). Therefore, Tesla’s sales volume will remain the key to the market size and penetration rate of OTA technology.

Other automakers, such as BMW, Mercedes-Benz, GM, Ford, Toyota, and Volkswagen, also began rolling out OTA updates in their models from 2015 to 2020, although it wasn’t until the year 2020 did most of these companies perform OTA updates on any appreciable scale. Furthermore, most OTA updates were software updates as opposed to firmware updates (for ADAS and powertrain functionalities), since issuing firmware OTA updates still remains a major issue for automakers at the moment.

TrendForce also indicates that, should automakers wish to improve automotive functionalities with OTA updates, they would need to completely overhaul their cars’ electronic and electrical architectures. In this light, one of the prerequisites of performing functional OTA updates is the availability of compatible hardware in cars.

For instance, in order to activate LiDAR functionality, automakers must first equip a car with LiDAR hardware. Once self-driving technology matures to the point when it is deemed appropriate to be enabled on a given car, then automakers can activate the necessary LiDAR functionality with OTA updates.

Of course, all of this hinges on whether automakers are willing to bear the cost of preemptively equipping their cars with the necessary hardware, as well as whether they have any faith in the success of new services/functions to be activated by OTA in the future. Most importantly, however, if consumers were uninterested in these services and functions, then automakers would have no way of recouping their preemptive investments in the aforementioned hardware.

On the whole, despite most automakers’ planned to roll out the capability of OTA updates to their vehicles, they still face bottlenecks in performing OTA updates safely and providing useful upgrades for users. Only by overcoming these hurdles will automakers effectively improve the driving experience and convince car owners as well as prospective buyers that OTA is a worthy investment.

（Cover imgae source: Pixabay）

The third-generation semiconductor industry was impaired by the US-China trade war and the COVID-19 pandemic successively from 2018 to 2020, according to TrendForce’s latest investigations. During this period, the semiconductor industry on the whole saw limited upward momentum, in turn leading to muted growth for the 3rd gen semiconductor segment as well. However, this segment is likely to enter a rapid upturn owing to high demand from automotive, industrial, and telecom applications. In particular, the GaN power device market will undergo the fastest growth, with a $61 million revenue, a 90.6% YoY increase, projected for 2021.

TrendForce expects three factors to drive the rapid growth of the GaN and SiC markets in 2021: First, widespread vaccinations are projected to drastically curb the spread of the pandemic, thereby galvanizing a stable increase in the demand for base station components, as well as for components used in industrial energy transition, such as power inverters and converters. Secondly, as Tesla began adopting SiC MOSFET designs for its in-house inverters used in Model 3 vehicles, the automotive industry has started to place increasing importance on 3rd gen semiconductors. Finally, China will invest enormous capital into its 14th five-year plan starting this year and expand its 3rd gen semiconductor production capacity to ultimately achieve semiconductor independence.

Resurging demand from EV, industrial, and telecom sectors will bring about a corresponding increase in 3rd gen semiconductor device revenue

Although certain foundries, such as TSMC and VIS, have been attempting to manufacture GaN devices with 8-inch wafers, 6-inch wafers are still the mainstream. As the pandemic shows signs of a slowdown, the demand for RF front end in 5G base stations, for smartphone chargers, and for automotive on-board chargers has now gradually risen. As such, total yearly revenue from GaN RF devices is projected to reach US$680 million, a 30.8% increase YoY, in 2021, whereas GaN power device revenue is projected to reach $61 million, which is a 90.6% increase YoY.

In particular, the remarkable increase in GaN power device revenue can primarily be attributed to the release of fast chargers from smartphone brands, such as Xiaomi, OPPO, and Vivo, starting in 2018. These chargers enjoyed excellent market reception thanks to their effective heat dissipation and small footprint. Some notebook computer manufacturers are currently looking to adopt fast charging technology for their notebook chargers as well. Going forward, TrendForce expects more smartphone and notebook chargers to feature GaN power devices, leading to a peak YoY increase in GaN power device revenue in 2022, after which there will be a noticeable slowdown in its upward trajectory as GaN power devices become widely adopted by charger manufacturers.

On the other hand, 6-inch wafer capacities for SiC devices have been in relative shortage, since SiC substrates are widely used in RF front end and power devices. TrendForce expects yearly SiC power device revenue to reach $680 million, a 32% increase YoY, in 2021. Major substrate suppliers, including Cree, II-VI, and STMicroelectronics, are planning to manufacture 8-inch SiC substrates, but the short supply of SiC substrates will unlikely be resolved until 2022.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

Global sales of NEV (new energy vehicles, which include both BEV and PHEV) skyrocketed in the final two months of 2020, with various models setting historical sales records, according to TrendForce’s latest investigations. TrendForce estimates total NEV sales for 2020 at 2.9 million units, a 43% increase YoY, and further expects yearly sales to reach 3.9 million units in 2021. However, as the current shortage of automotive chips has had a considerable impact on the auto industry, some uncertainties still exist in the forecast of EV sales.

With regards to the BEV market, Tesla primarily focused on marketing the Model 3 as its key model for 2020. The automaker took leadership position with a 24.5% market share last year, while the Model Y is expected to be key to securing its continued leadership in 2021 primarily because China has issued a sales permit allowing the Model Y to be exempt from purchase tax. Furthermore, Tesla was able to catch its competitors off guard by discounting Model Y prices by 30% on the first day of 2021. Volkswagen took second place in the rankings due to not only the excellent market reception of the e-Golf, but also the remarkable sales figures set by the ID.3 in 2H20, which helped Volkswagen stabilize its market share. Incidentally, as the ID.4 is set to hit the market later on, it is expected to make meaningful contributions to Volkswagen’s overall EV sales in 2021 instead of 2020.

BYD derives its competitive advantage from having a comprehensive model lineup. The Chinese company comfortably took third place with a 6.4% market share. Conversely, fourth-ranked Wuling Hongguang became the dark horse of 2020 by fielding a single EV model, the Hongguang Mini. Not only was the Hongguang Mini attractively priced, but the Chinese government also made a heavy push for NEV sales in China’s rural areas. Both of these factors allowed the Hongguang Mini to become one of the global top sellers within six months of its release. Hot on the heels of Wuling Hongguang is Renault, which took fifth place in the ranking. Renault was able to score a 5.6% market share thanks to its longstanding best seller ZOE. Although other models, including the Nissan Leaf and Hyundai Kona, also posted remarkable sales performances last year, their respective automakers did not place on the top five list because these automakers each had total EV sales that fell short of the five automakers on the list.

On the other hand, the top PHEV manufacturers were neck and neck in terms of ranking by market share. BMW and Mercedes-Benz each possessed a 13% market share, followed by Volvo with 12%. Fourth-ranked Volkswagen and fifth-ranked Audi registered a 10% market share and 6% market share, respectively.

TrendForce indicates that China and Europe are perfect examples of EV markets propelled by government policies. For instance, European automakers have adopted a proactive position to expand their EV lineups as a result of the stringent emissions standards set by the EU, and these automakers have subsequently been aiming to achieve zero carbon emissions or increase the share of EVs in their total vehicle sales. Apart from China and Europe, the US is yet another market where policies may have a positive effect on EV sales. After winning the 2020 presidential election, Biden is now set to launch his clean energy proposal, which includes replacing the US government’s existing fleet with EVs, removing the previously set ceiling on federal tax credits for EV purchases, and offering consumer tax incentives to replacing their conventional fossil fuel vehicles with EVs, among other actions. If these proposed actions were eventually implemented, TrendForce believes they would be able to drive up EV sales in the US.