TSMC, the world’s leading foundry in the 3nm technology, is reportedly experiencing a surge in the number of New Tape-Outs (NTOs) for the 3nm family in 2024, with Clients such as MediaTek, AMD, NVIDIA, Qualcomm, and Intel.

Among the 3nm family, the N3P process, set for mass production in the second half of 2024, is also making significant progress. Rumors suggest that Tesla has been added to the list of customers, with plans to utilize the N3P for the production of next-generation Full Self-Driving (FSD) chips after its launch.

Currently, Tesla has placed orders with TSMC for numerous chips related to electric vehicles. For instance, the supercomputer chip “D1” is utilizing TSMC’s 7nm technology along with advanced packaging processes.

Reportedly, according to industry sources, Tesla’s older FSD chips were initially produced using Samsung’s 14nm process, later upgraded to Samsung’s 7nm process. Subsequently, considering design upgrades, production quality, and scale, Tesla has shifted its HW 4.0 autonomous driving chip production to TSMC, utilizing the 5nm technology family.

The latest information per the report indicates that Tesla has recently initiated a NTO process with TSMC, planning to utilize the N3P for the production of the fifth generation of self-driving vehicle chips. Market expectations are high, with the influx of relevant orders suggesting that Tesla has the potential to become one of TSMC’s major clients.

According to TSMC’s previously disclosed process roadmap, the N3P process is an advanced version within the 3nm family, scheduled for production in 2024. Compared to the N3E, the N3P boasts a 5% improvement in performance, a 5% to 10% reduction in power consumption, and a 1.04 times increase in chip density.

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(Photo credit: TSMC)

Tesla initiated a price war in the Chinese market this year, forcing local manufacturers to confront the challenge. However, after nearly a year of intense competition, Tesla unexpectedly called a truce, while Chinese manufacturers led by BYD thrived in the fierce price war, turning adversity into opportunity.

According to a tally by Tencent News-affiliated media “Deep Web,” in the first two days of November, three Chinese automakers have already announced price reduction and promotion policies: BYD offers discounts ranging from CNY 5,000 to RMD 18,000 on five models; Leapmotor provides a maximum discount of CNY  10,000 across all models; Lynk & Co, under the Geely umbrella, offers a subsidy of CNY 6,000 for its Lynk 08 model. Since October, more than 10 car manufacturers have implemented price reduction and promotion policies.

Tesla Bucks the Trend with Price Increase

While several Chinese car manufacturers are engaging in a price war, Tesla is moving against the current by increasing prices. On November 9th, Tesla officially announced a price hike for the Model 3 Long Range version by CNY 1,500, bringing the total price to CNY 297,400. The Model Y Long Range version also saw a price increase of CNY 2,500, bringing the total to CNY 302,400.

This marks Tesla’s second price hike in nearly a month. On October 27th, Tesla China raised the price of the Model Y Performance version by CNY 14,000, resulting in an adjusted selling price of CNY 363,900. Additionally, the North American Tesla Model Y Long Range version also experienced a price increase of USD 500.

The report further indicated the industry analysis, suggesting that the previous round of price increases has already eroded Tesla’s profitability. Tesla’s third-quarter financial report, released in mid-October, revealed earnings and delivery volumes below Wall Street expectations. The gross profit margin was particularly impacted by the price war, reaching a four-year low of 17.9%.

BYD Secures Sales Crown in Chinese Car Price War  

In contrast to Tesla’s unexpected withdrawal from the recent price war, Chinese manufacturers are not only surviving but maintaining their ability to continue the battle. BYD, sitting comfortably as the global leader in new energy vehicle sales, reported a third-quarter net profit of CNY 11.54 billion.

Meanwhile, AITO revived its fortunes with the new M7 model, and XPeng Motors successfully returning to growth in sales.

Data indicates that BYD emerged as the winner in the first half of the price war, maintaining the top position in sales. Despite a decrease in unit revenue amid the price war, quarterly net profit per unit increased. In contrast, Tesla’s per-unit net profit has declined each quarter this year, reaching a global per-unit net profit of only CNY 31,300.

The overall gross profit margin trend and per-unit net profit trend of BYD and Tesla align. In the third quarter of this year, BYD achieved a historic high gross profit margin of 22.1%, while Tesla’s gross profit margin hit a near three-year low at 17.89%.

However, the price war is inevitably taking a toll on the industry, with multiple research institutions and investment banks predicting an increase in mergers and acquisitions, as well as bankruptcy reorganizations among Chinese new energy vehicle manufacturers in the future.

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(Photo credit: BYD)

According to TechNews’ report, during a recent financial conference, Samsung revealed its plans to diversify its sales structure by expanding its clientele in the fields of artificial intelligence semiconductors and automotive, moving away from its previous heavy reliance on the mobile sector.

As of 2023, it is understood that Samsung’s foundry sales distribution includes 54% from mobile, 19% from high-performance computing, and 11% from automotive.

According to a report from Wccftech, senior executives at Samsung have indicated that major players such as super-scale data centers, automotive original equipment manufacturers (OEMs), and other clients have been in contact with Samsung, considering the adoption of Samsung’s foundry services to manufacture their designed chips.

This includes the in-development 4-nanometer artificial intelligence accelerator and the 5-nanometer chips for the top-ranked electric vehicle company. Currently, Samsung is gearing up with its advanced packaging solution called SAINT (Samsung Advanced Interconnection Technology), aiming to compete with TSMC’s advanced packaging, CoWoS. Based on information disclosed by Samsung, there might be a collaboration with AMD in the field of artificial intelligence, involving the manufacturing of certain chips.

In fact, recent rumors suggest that Samsung has already reached an agreement with AMD to provide HBM3 and packaging technology for the upcoming Instinct MI300 series. Additionally, AMD might adopt a dual-sourcing strategy for the Zen 5 series architecture, choosing TSMC’s 3-nanometer process and Samsung’s 4-nanometer process technology for manufacturing the next-generation chips.

According to sources, besides the artificial intelligence domain, Samsung is likely to have received orders from the electric vehicle giant Tesla. The speculation points towards the possibility of fulfilling orders for Tesla’s next-generation HW 5.0 chip, designed for fully autonomous driving applications.

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(Photo credit: Samsung)

According to IJIWEI News, two Indian government officials have revealed that India is considering Tesla’s request to reduce import duties on electric vehicles as an enticement for the company to establish a factory in the country.

Tesla has reportedly indicated that establishing a facility in India hinges on government concessions regarding import duties. Officials mentioned that Tesla insists on “at least a duty relaxation for a certain transition period” and added that “there would be sunset clauses.”

Currently, India imposes a 70% tax on imported cars under $40,000 USD to support the local automobile industry, while those above $40,000 USD face a 100% duty. India is contemplating reducing tariffs on all electric vehicles to 15%, regardless of their selling price, although there’s no unified consensus within the government.

As reported, the proposing officials hope that the aforementioned legislation will not only benefit India but also other qualifying manufacturers, instead of favoring a specific company alone.

Previously, there were reports suggesting Tesla’s intention to establish a factory in India for manufacturing low-cost electric vehicles, catering to the domestic market and planning for exports. However, Tesla’s 2022 plans for reduced import duties on electric vehicles were canceled as the Indian government insisted that the vehicles must be manufactured in India.

Over the past year, senior Tesla executives have met with Indian government officials at least three times. When Indian Prime Minister Narendra Modi visited the United States for an official visit in June this year, he met with Tesla CEO Elon Musk in New York to discuss the potential establishment of a plant in India.

(Photo credit: Pixabay)

Once considered a driving force behind economic growth, the electric vehicle (EV) market is facing a reality check as consumers are becoming more practical about their needs due to rising inflation and high-interest rates. Automakers acknowledge that in times of inflation, electric vehicles won’t be on consumers’ radar in the coming years unless their prices are lowered.

In the third quarter, the U.S. saw a surge in EV sales, breaking the 313,000 mark, almost a 50% increase from the same period the previous year. The EV market share reached an all-time high of 7.9%.

However, this growth may be reaching its peak as major automakers are now either postponing their electric vehicle sales targets and production plans or resorting to price reductions.

For instance, Ford has extended the annual production target for electric vehicles to 600,000 units by one year, abandoned the goal of producing 2 million electric vehicles by 2026, and temporarily halted a $12 billion investment in EV projects.

General Motors has also abandoned its sales targets, and Honda has given up on its plans to jointly develop electric vehicles priced below $30,000 with General Motors. Tesla has postponed its super factory project in Mexico.

More manufacturers are resorting to price reductions, including Mercedes-Benz, Tesla, and Ford’s electric trucks, all of which are offering significant discounts.

Price vs. Affordability

Consumers are primarily concerned with the price difference between EVs and gasoline vehicles. In the U.S., most compact electric SUVs are priced at around $52,000, while similar gasoline SUVs cost only about $34,000.

According to Ford’s CEO, in the EV industry, exceptional products alone are no longer sufficient; they must also be cost-competitive. Elon Musk also noted that the high-interest-rate environment is unfavorable for market demand, and making products more affordable is essential to encourage people to make purchases.

However, even with price reductions and discounts, it seems that buyers remain unimpressed. U.S. dealers have observed that the next wave of buyers, unlike those who made impulsive purchases in the past couple of years, are now more focused on practical factors such as cost, infrastructure challenges, and lifestyle impediments.

Practical Considerations

Market analysts suggest that over the past decade of low-interest rates, consumers have increased their spending. However, as interest rates rise, consumers now find the need to be more frugal.

The price of EVs has gone beyond the affordability range of many consumers. The current high-interest-rate environment is also unfavorable for convincing consumers to explore immature automotive technologies.

A survey found that aside from price, consumers still worry about range anxiety and the lack of charging infrastructure. Up to 77% of respondents said these were the most pressing issues when considering EVs. Consumers are less likely to consider immature products when their budgets are tight.

The U.S. government aims to have half of all new vehicles sold be zero-emission vehicles by 2030. Just a few years ago, policymakers believed that Americans would adopt EVs without needing much persuasion. However, this optimism now appears to be overly idealistic.

For now, General Motors, Ford, and even Tesla are deciding to hold onto their cash reserves and redeploy them when the economic situation stabilizes. Toyota Chairman Akio Toyoda, who has consistently argued that pure EVs are not the only solution, should be feeling vindicated as he stated at the recent Tokyo Motor Show, saying that “People are finally seeing reality.”

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(Photo credit: Pixabay)