From foundational propulsion systems to cutting-edge autonomous driving, new technologies in modern electric vehicles(EVs) are increasingly leaning on advanced PCBs.

In a state-of-the-art electric vehicle, chips on PCB control a broad range of functions from safety alerts to convenience systems. As additional components like communication, camera, sensor, and battery charging modules join the network, the collective value of PCB is set to rise dramatically.

TrendForce’s study suggests that electric vehicle penetration was at 18% of the global vehicle sales of 80.98 million in 2022. By 2026, it’s estimated to climb to 41% of 92.85 million global vehicle sales. This surge is expected to propel automotive PCB production value from $9.2 billion in 2022 to $14.5 billion in 2026, a 12% CAGR.

Notably, it’s not just quantity but also the average value per vehicle that’s seeing significant growth in PCB use. The rising battery capacity continues to drive PCB usage growth. The average PCB value for an all-electric vehicle is estimated to be a hefty 5 to 6 times that of a traditional gas-powered car. Key contributors to this are Battery Management Systems (BMS) and autonomous driving systems, which are greatly enhancing the overall worth of automotive PCBs.

BMS Embraces FPC as Standard

The electric control system, which makes up over half the value of a vehicle’s PCB, is now experiencing a technical transformation. One of the significant factors affecting the widespread adoption of EVs has been ‘range anxiety.’ Beyond enhancing battery energy density and increasing charging infrastructure, there’s a critical objective to lighten vehicles.

This focus is particularly relevant to the battery, which comprises a third of an electric vehicle’s weight.

In the key BMS systems, the use of FPCs (Flexible Printed Circuits) to replace traditional wiring harnesses is considered a major solution, mainly because FPCs reduce weight and space usage by more than 50% compared to harnesses and also perform better in terms of heat dissipation and design flexibility.

Based on a rough estimate, a mainstream vehicle battery pack requires 7 to 12 battery modules, each including 1 to 2 FPCs, putting the overall value of FPCs at approximately $60 to $210.

Currently, FPCs have a penetration rate of about 20% in BMS. However, as major automotive battery manufacturers like Tesla, CATL, and BYD continue to adopt and set FPCs as the mainstream specification, it is expected that by 2026, the proportion of FPC usage will reach 80%, further enhancing the PCB value content in the electrical control system.

Autonomous Vehicles to Fuel the HDI Demand

Advancements in autonomous driving technology are leading to an increased need for PCBs due to the rise in in-vehicle cameras and radar. Key applications like millimeter-wave radars and LiDAR necessitate advanced PCBs as carriers.

It is said that Tesla may reintroduce millimeter-wave radar, highlighting that this technology remains an indispensable component of autonomous vehicles. The PCB layer count for mainstream 77GHz millimeter-wave radar reaches 8 layers, adopting high-frequency CCLs.

The precision of LiDAR is about ten times that of millimeter-wave radar, which allows for accurate 3D modeling of information about the external environment of the vehicle, hence it is mainly used in L3 and above-level vehicles.

LiDAR primarily uses HDI (High-Density Interconnector), with each LiDAR module requiring about 4 PCBs. Compared to traditional 4 to 8-layer in-vehicle PCBs, the price of HDI is more than three times higher.

For Level 3 and above autonomous systems fitted with LIDAR, the HDIs used can cost tens of dollars. Although LiDAR’s adoption rate is currently slow due to regulatory and technical barriers, its high value offers significant potential for related components.

Another emerging trend is the development of smart cockpits, which comprise the Cockpit Domain Controller (CDC), in-vehicle infotainment system, driver information display system, Head-Up Display (HUD), dashcam, and so on. As the functions become more complex, there is a need for PCBs with higher wiring density and narrower line width and spacing, which will further drive the demand for HDI boards.

In summary, the incorporation of high-value PCBs in both the BMS and autonomous driving systems is still in its infancy. As cars become more intelligent and aim to serve as a ‘third living space,’ we can expect more innovative applications in the automotive industry, thereby providing exciting opportunities for the PCB sector.

Under the grand banner of China’s domestic substitution policy, the wave of locally produced chips is swiftly spreading to the realm of Power Management ICs (PMICs).

Over the past three years, the number of fundraisings for Chinese PMIC manufacturers has shot up. We’ve seen an increase from 18 rounds in 2020 and 19 rounds in 2021 to a whopping 24 rounds in 2022 – a substantial leap from the figures in 2018 and 2019.

Looking at the number of IPO last year, 23 Chinese automotive-grade chip companies went public, with another 25 poised to follow suit. Among these 48 automotive chip firms, 12 boast PMICs, making it the largest product sector in these investments.

New Energy Vehicles Fuel China’s PMIC Market

Both the data points signal a golden era for Chinese PMIC industry, with the new energy vehicles(NEV)emerging as a key driving force.

Compared to traditional vehicles with internal combustion engines, NEV requires a greater number of PMICs, like DC/DC converters, to manage voltage conversions. This, in turn, propels overall PMIC growth. From 2021, automotive PMICs have entered a phase of rapid growth. TrendForce forecasts that the scale of automotive PMICs will reach $7.65 billion by 2023, marking a year-on-year growth of 4.2%.

Government’s subsidy incentives and a booming domestic demand for NEV are the primary reasons for nudging the Chinese semiconductor industry to embrace PMICs more quickly. This trend aligns perfectly with the growth trajectory of China’s power semiconductors.

Chinese Manufacturers Plant Flags in Automotive PMICs

Over the past year, several domestic PMIC manufacturers, including SG Micro, Etek, Shanghai Belling, and Halo Micro, have rolled out automotive-grade PMICs. Some of these chips have even entered mass production and are being adopted by domestic vehicle bands.

Foundries are equally keen to seize the golden opportunity. For instance, GTA Semiconductor has successfully raised over 10 billion yuan in recent years. The company has earmarked a portion of the funds specifically for the R&D of automotive-grade PMIC.

However, the opportunities come with their fair share of challenges. New entrants must navigate stringent automotive certifications, ensure product resilience across extreme temperature ranges from -40°C to 125°C, guarantee a product lifespan exceeding ten years, and manage prolonged validation cycles. These demanding requirements significantly raise the entry barriers for newcomers.

On a global scale, international IDM giants like Infineon, NXP, TI, and Renesas are well entrenched in the PMIC sector, boasting a diverse range of products. In contrast, Chinese PMICs supply chain are just off the starting blocks of the race. To gain trust from customers, expand their product portfolio, and penetrate the global market, they are bound to confront a succession of hurdles, which will persistently scrutinise the enduring R&D capabilities and business strategies of each manufacturer.

Since the 1980s, Toyota collaborated with Denso to conduct research on SiC. In 2014, SiC inverters were installed in Toyota’s Prius and Camry hybrid electric vehicles (HEVs) for driving and on-road testing, confirming a 5-10% improvement in energy efficiency. After this successful testing, Toyota adopted SiC in its hydrogen fuel cell buses that were put into formal operation in 2015 and 2018. At that time, the cost of SiC chips was higher than it is now, so Toyota continued to primarily use Si-IGBT inverters in its hybrid vehicle models.

Model 3 SiC Inverter Sparks Toyota’s Concerns About Electrification

In 2017, the Model 3, equipped with SiC inverters, became the best-selling battery electric vehicle (BEV) on the market due to its high performance and long range. It also contributed to the surge of new BEV sales, which exceeded 1.2 million vehicles in 2018. Since then, many automakers have targeted SiC as the basis for next-generation BEV drivetrain systems, while Toyota continued to adhere to its hybrid electric vehicle (HEV) and hydrogen fuel cell vehicle (FCV) strategies. According to TrendForce, the total new sales of PHEVs and BEVs is estimated to reach approximately 10.63 million vehicles in 2022, while Toyota’s sales in this sub-market are only close to 100,000, accounting for about 1% of the market share, far behind BYD’s 19% and Tesla’s 15%.

In the current EV industry, BEVs and PHEVs have become the mainstream, while HEVs may gradually shrink in the future market. Pressures from the changing market have forced Toyota, which has not fully focused on BEVs and PHEVs in the past, to rethink its overall electrification strategy and accelerate the production capacity and technological layout of key components, such as SiC.

Toyota aims to sell 3.5 million electric vehicles by 2030, and has demonstrated its commitment to electrification through the establishment of a SiC wafer manufacturing technology research company. SiC chips have the potential to improve energy efficiency in electric vehicles, but their high cost is currently a challenge due to low SiC wafer yields in the manufacturing process. QureDA Research’s Dynamic AGE-ing technology could help improve wafer yields and lower chip costs. If successful, this technology, combined with Toyota’s market presence, could enhance the competitiveness of Toyota’s electric vehicles and give them a chance to compete for a leading position in the future electric vehicle market.

（Image credit: Toyota LinkedIn）

Tesla has caused a lot of buzz in the global car market by cutting prices across several regional markets. The US, China, Europe, and Japan have all seen a significant drop in prices of Tesla vehicles, with magnitudes ranging from 6% to 20%. The US, in particular, has seen the largest cut in the average price of Tesla vehicles. The price of the RWD version of the Model Y has come down to USD 13,000, showing a reduction of 19.7%.

Tesla Aims to Increase Market Share and Put Pressure on Competitors

Tesla sold 1.313 million battery-electric vehicles (pure electric vehicles) in 2022 and retained its leadership in this niche segment of the car market. However, its market share for battery-electric vehicles has been shrinking from 24.5% in 2020 to 20% in 2021 and just 17% in 2022. This in part has to do with the rising number of entrants this market as well as the rising number of battery-electric models that are being offered by these competitors. Furthermore, China accounts for more than half of the global electric car market. Therefore, Tesla has found that its sales performance in China significantly affects its overall market share.

In the Chinese electric car market, sales efforts are concentrated on “economical” or affordable models that are priced within the range of CNY 150,000~200,000. Before Tesla initiated its recent price cuts, the starting price of the Model 3 had been at CNY 265,900, which is way above the mainstream price range.

However, the price of the Model 3 has been slashed by 13.5%, with the starting price now arriving at CNY 229,900. Since the price difference between the Model 3 and the competing economical models has shrunk to 15%, Chinese consumers that are mostly residing within the CNY 150,000~200,000 range could be much more receptive to Tesla’s messaging. Also, many Chinese carmakers have lately raised prices on their electric models because of high cost pressure. Tesla is thus expected to benefit by taking the opposite approach for pricing.

Turning to the US, the biggest benefit that Tesla has touted for this round of price slashing is the eligibility of its vehicles in obtaining a tax credit of up to USD 7,500. The Inflation Reduction Act of 2022 contains a provision that subsidizes the purchasing of a new electric car with a tax credit. Electric SUV or vans that are priced no higher than USD 80,000 and other types of electric vehicles that are priced no higher than USD 55,000 are eligible. In the case of Tesla’s Model Y, the version with three rows of seats (i.e., a total of seven seats) can apply for the tax credit as an electric SUV, whereas the version with two rows of seats (i.e., a total of five seats) can apply for the same benefit as one of the other types of electric vehicles.

For consumers in the US, the price of the Long Range version of the Model Y in 2023 is now 31.1% lower than it was in 2022 because of the price cut and the tax credit. Besides turning consumers’ heads, Tesla is also putting a lot of pressure on its competitors with this undercutting strategy. After all, Tesla’s vehicle models tend to serve as the base standard for carmakers’ electrified offerings.

Tesla Has a Firm Grasp on Fluctuations in Prices of Key Components, Thereby Making Cost Sensitivity a Competitive Advantage

In addition to discussing the effects of Tesla’s price cuts on itself and competitors, and other important issue that needs to be addressed is why Tesla can lower prices when other carmakers are compelled to raise them. To answer this question, we first turn to Tesla’s profit margin. Compared with its competitors, Tesla has a larger room for profit. Therefore, it can lower prices in exchange for more vehicle sales and market share.

This leads to the question as to how Tesla has attained such a large profit margin. The answer is that Tesla is excelled at managing its cost structure and supply chain. With respect to supply chain management, Tesla takes a different approach and has gotten involved more deeply than do other carmakers. For instance, Tesla directly sources components and do not rely on Tier-1 suppliers for system integration.

By contrast, traditional carmakers assemble vehicles with the finished parts provided by Tier-1 suppliers. From Tesla’s perspective, directly sourcing components and doing its own system integration offer some notable advantages. First, this approach facilitates the adoption of the latest technologies at the component level. Second, Tesla is much more aware of costs and also exerts a greater control over them. On the whole, Tesla has a better sense of the price fluctuations in the upstream than do its competitors.

The degree of Tesla involvement in its supply chain is also reflected in its activities in the global lithium market. The soaring demand and the Russia-Ukraine military conflict caused lithium prices to rise rapidly during the 2021~2022 period. Carmakers now recognize that the only effective way to secure the supply of raw materials and control the costs of these materials is to manage the upstream.

However, Tesla is not simply securing lithium supply contracts. It is also thinking about getting involved in ore mining and metal refining. Tesla’s activities in recent years have led to a capacity crunch in the market for mining and processing lithium ores. Since lithium is incorporated into power batteries through multiple phases of additional processing, carmakers tend to suffer the most when it comes to lack of price transparency.

（Image credit: Tesla LinkedIn）