06 Jan EE Times : Experts Expect Chinese Makers to Lead Global EV Market

Media Source : EE Times

By : Alan Patterson

December 18, 2023

Experts predict that Chinese companies will dominate the global EV industry over the next decade by selling cars for prices unheard of outside China.

Chinese companies will lead the global electric vehicle (EV) industry in the next 10 years by selling cars for prices unheard of outside China, according to experts interviewed by EE Times.

China’s domestic sales of EVs so far in 2023, at about 8 million units, are nearly double the 4.5 million sold in the rest of the world, according to Sandy Munro, an automotive engineer who founded industry consultancy Munro & Associates. BYD (Build Your Dreams), a publicly listed Chinese manufacturer, this year became the world’s largest EV maker, overtaking Tesla, he said.

BYD will eventually be “the biggest car company in the world,” Munro said. “Bigger than Volkswagen, bigger than General Motors, bigger than Toyota.”

While Western nations accuse China of EV dumping, about 40 of the surviving startups in the world’s largest car market are ramping up production to meet an expected surge in demand. China has led the rest of the world with an estimated $14 billion in EV subsidies since 2009.

Munro predicted that, by 2028, about half of the cars sold worldwide will be EVs. Sweden and Norway have become trendsetters by phasing out internal combustion engines (ICE) cars, he noted.

Chinese automakers will capture more of the global market, particularly in key countries like India that are unlikely to build EV industries in the near term, said Paul Triolo, who advises tech companies at Albright Stonebridge Group.

Developing nations will welcome lower-priced EVs from Chinese manufacturers as they try to meet climate targets, he added.

In China, EV prices are far lower than in the rest of the world. BYD’s Seagull EV, introduced in April, sells for about $11,000. That’s less than half the $26,838 “Model 2” EV that Tesla plans to make at a factory in Germany. The typical price for an EV in the U.S. today is about $50,000, Munro said.

BYD has expanded sales into Norway, Denmark and the UK, as well as Thailand and Australia. The company hasn’t entered the U.S. Tense relations between the U.S. and China and President Joe Biden’s push to build EVs in the U.S. have delayed BYD’s entry to the second-largest automobile market after China, according to a Reuters report.

For now, the EV price war is confined primarily to China, where BYD and Tesla are the top EV competitors.

“Tesla’s been talking about a $25,000 EV someday”, said Bill Russo, the CEO of Shanghai-based consulting firm Automobility. “Volkswagen’s saying ‘Let’s set a target for eventually making €25,000 [$ 27,000] EVs.’ Well, they haven’t done that yet. I can get an EV here for less than half the price.”

BYD and Tesla didn’t respond to EE Times’ requests for comment on this article.

Arrested development

Unlike China, U.S. demand for EVs has stalled because the cars remain too expensive and the charging infrastructure is too scattered, according to domestic car dealers, who in November sent an open letter to the Biden administration urging a delay in regulations boosting domestic EV manufacturing.

In May, the U.S. Environmental Protection Agency proposed a rule that calls for 60% of new vehicles sold in 2030 to be EVs. That proposal exceeds a Biden administration executive order mandating 50% EV sales by 2030.

The U.S. Inflation Reduction Act offers tax credits of up to $7,500 to U.S. EV buyers while requiring that, by 2024, no EV containing battery components made by a “foreign entity of concern”—meaning China—will be eligible for the subsidies.

EVs are piling up at U.S. dealerships.

“Today, the supply of unsold battery electric vehicles is surging, as they are not selling nearly as fast as they are arriving at our dealerships—even with deep price cuts, manufacturer incentives and generous government incentives,” the letter from the U.S. auto dealers said. “Mr. President, it is time to tap the brakes on the unrealistic government EV mandate.”

The U.S. should “allow time” for battery tech to advance, EVs to become more affordable, domestic sources to make batteries and the charging infrastructure to be built, the letter said.

The U.S. won’t have a domestic EV battery supply chain until a decade years from now, Munro estimates.

BYD and smaller Chinese rivals have advantages in the supply chain for EV batteries, which account for up to 40% of an EV’s cost. Chinese battery makers like CATL and BYD have also built a wall of patent portfolios and secured supplies of key materials like rare earths.

Car chip ambitions

China is likely to capture more of the chip market for EVs, which use more silicon than conventional ICE cars.

Chinese foundries, such as Semiconductor Manufacturing International Corp. and Hua Hong, are expanding production of EV chips after U.S. export controls last year blocked the Chinese companies from buying tools to make more advanced chips, Triolo said.

Chinese chipmakers are set to compete in chips for ADAS systems, including image sensors, edge GPUs, memory, communications chips and microcontrollers, as well as power-related silicon carbide and gallium nitride semiconductors for charging systems, Triolo added.

“Advanced ASICs for ADAS systems may be more difficult for Chinese firms to develop and have manufactured in China,” he said. “But so far, U.S. export controls have not targeted this segment. Chinese firms can still acquire ADAS systems using some advanced Nvidia GPUs, for example. I would expect Chinese firms to be focused on development of domestic alternatives for all semiconductors used in EVs, much like Huawei has attempted to build smartphones largely or completely free of U.S.-controlled technology.”

Chip competition

Chip designer Nvidia recognizes it may soon face greater competition from companies in China.

“We always embrace competition where it’s going to force us to be better,” Nvidia Automotive VP Danny Shapiro told EE Times. “It’s about developing the whole platform, it’s the networking and a huge amount ofsoftware in the ecosystem and the libraries and the algorithms. To be successful, you really have to develop it all.”

Shapiro agrees that Chinese-made EVs will make a splash worldwide.

“I’ve been impressed by the vehicles that I’ve ridden in from China,” he said. “The innovation, the technology and the quality are quite good. From an underlying technology perspective, I think there’s a lot of great work going on, especially as we look at safety driver assistance systems, autonomy, the kinds of things we’re heavily involved in.”

Nvidia sells chips to BYD, Li Auto, Nio and other Chinese EV makers, as well as established brands like Mercedes-Benz, Jaguar and Volvo.

In Taiwan, Nvidia has joined Foxconn in an EV alliance aimed at forming partnerships with companies that are still dipping their toes in the EV business, potentially including Apple. Late this year, Foxconn said it will offer EVs featuring the upcoming Nvidia Drive Hyperion 9 platform, including the chipmaker’s Drive Thor processor and sensor architecture.

U.S. chip designer Ambarella is sharpening its focus on the growing Chinese market for EV chips.

For now, U.S.-based Tesla remains the global leader in EV sales and tech, the analysts said.

“The Tesla Model Y will be the best-selling car of any kind on Earth this year,” Tesla CEO Elon Musk said in a New York Times Dealbook interview last week. “By far, the toughest competition is in China.”

Commenting on predictions that the top carmakers will be Tesla followed by nine other Chinese companies, Musk said, “I think they might not be wrong.”

China has won this round of advancement of innovation around electric propulsion, Russo said.

“We need to do what it takes to get back in the game,” he added.

This article was originally published on EE Times.

SOURCE: https://www.eetasia.com/experts-expect-chinese-makers-to-lead-global-ev-market/?

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