Major optical manufacturer, Largan Precision, held its online Q3 earnings conference on October 12, 2023. During the session, Chairman Lin En-ping’s responses to inquiries from analysts conveyed that the previously sluggish smartphone market might finally witness an upturn in Q4, as the iPhone 15 Pro Max’s robust pre-order performance surpassed market expectations. This bodes well for downstream customers’ willingness to procure lenses, and high-end lens demand is expected to rise.

TrendForce’s Insight:

1. Positive Signals Emerge from Largan Precision’s Statement

Since the beginning of 2023, the global smartphone market has been experiencing a general slump, influenced by factors such as China’s post-pandemic economic recovery falling short of expectations, rampant inflation, and uncertainty about economic prospects. Looking back at the previous Q1 and Q2 earnings conferences held by Largan Precision, Chairman Lin En-ping consistently displayed a relatively pessimistic outlook when addressing questions from financial analysts. This pessimism can be attributed to the subdued end-user demand, resulting in a natural decline in procurement momentum among downstream customers, which has made it challenging for Largan Precision to foresee clear future order demand.

However, with the arrival of Q4, the traditional peak season for smartphones, Chairman Lin En-ping provided a more positive response during the latest conference. This shift in stance can be attributed to the better-than-expected pre-order status of the high-end iPhone 15 Pro Max and the subsequent improvement in procurement momentum among downstream customers. Furthermore, there has been a resurgence in overall demand for high-end lenses. It is anticipated that the end demand for smartphones may improve in the upcoming Q4.

2. Increased Willingness for Lens Upgrades

Volkswagen recently unveiled its extensively redesigned Tiguan lineup. This vehicle, built on the MQB Evo platform, offers a range of powertrain options, including gasoline, diesel, mild-hybrid, and plug-in hybrid (PHEV) variants. Notably, the PHEV model features a 1.5-liter TSI evo 2 turbocharged engine and a 19.7 kWh battery pack, providing an impressive electric-only driving range of 100 km with an efficiency of around 5.1 km/kWh.

TrendForce’s Insights:

1. Addressing Range Anxiety: PHEVs Gain Traction Among Consumers and Automakers

PHEVs offer a dual-power output system, primarily relying on traditional combustion engines for long-distance driving and electric power from the battery pack for shorter trips. These PHEVs feature larger battery packs than hybrid electric vehicles (HEVs) and can be recharged. Recently, PHEVs, including Volkswagen’s Tiguan, have surpassed a 100 km electric range milestone. Other models, such as the BMW 5 Series, Honda Accord e:PHEV, and Changan Oshan Z6, have also achieved similar electric ranges. Toyota even announced its focus on PHEV development, with a goal of reaching an average electric range of up to 200 km.

As calculated by TrendForce, the PHEV market share has grown from 9% in 2015 to 21% in 2023, with an average battery pack capacity increase from 15 kWh in 2018 to 20 kWh in 2023. While BEVs remain the primary choice in the electric vehicle market, manufacturers continue to introduce PHEV models due to consumer range anxiety and the desire to maximize the remaining value of traditional combustion engines.

2. Overcoming PHEV Challenges: Charging Infrastructure and Range Improvements

Most PHEVs are adapted from existing internal combustion engine (ICE) platforms, incorporating both ICE and electric power components. The complexity and higher number of components in PHEVs may impact overall vehicle efficiency, requiring additional maintenance or part replacement, which could be costly for consumers.

Consumers are well aware of the drawbacks of PHEVs, yet the steadily growing market share indicates that range anxiety remains a major concern. PHEVs, offering the comfort of a gasoline engine alongside electric capabilities, outweigh their inherent flaws when it comes to reducing range anxiety. Besides, Geely’s Zeekr hybrid series can incorporate a smart driving system with a centralized domain controller architecture, challenging the notion that traditional gasoline vehicle platforms can’t support advanced autonomous driving.

In conclusion, with the push from both the market and automakers, PHEV technology is continually advancing and is no longer considered a “transitional solution” as it was in the past. While inherent flaws still exist, consumers are more accepting of these drawbacks compared to their concerns about range anxiety. To completely eradicate range anxiety, the ratio of public charging stations to vehicles needs to shift from the current 7:1 to 2:1 or even 1:1. Alternatively, matching the range of internal combustion engine vehicles is crucial. However, both of these goals are not likely to be achieved until around 2030. Until then, PHEVs will maintain a significant presence in the market.