Electric vehicles have taken centre stage in recent motor shows. Vehicle manufacturers have been at pains to demonstrate how hybrid and battery electric vehicles are a big part of their development plans. This all bodes well for semiconductor suppliers. The value of semiconductors in electric vehicles is much greater than in vehicles with conventional engines.
A new report from IMS Research forecasts that demand for electric vehicles will grow steadily throughout the decade ahead from less than 600,000 in 2008 to over 2.5 million in 2020. Some vehicle manufacturers already offer hybrid electric vehicles. Many others have plans to introduce them, while commercially viable plug-in hybrid and battery electric vehicles are just staring to emerge. Governments around the world are investing money to support the development efforts of the vehicle manufacturers. The Chevrolet Volt, Nissan Leaf and BMW Mini EV are just some of the high profile models expected to enter production in 2010.
From a semiconductor supplier's point of view, growing production volumes of electric vehicles are only one side of the equation. The other side is that the value of semiconductors in an electric vehicle drive-train is not only higher than in a conventional vehicle drive-train: according to the IMS Research report, it is over 10x higher!
Power devices account for much of this increased semiconductor content. According to report author, Jon Cropley, "These vehicles have significant power IC, power discrete and power module content. Much of this is for the inverter required to drive the vehicle's main motor/generators. However, many other electric vehicle drive-train applications require semiconductors including battery monitoring and control, DC/DC converters, AC/DC chargers and air conditioning converters".
Many semiconductor suppliers have so far found it difficult to enter the supply chain for electric vehicles. Japanese vehicle manufacturers have dominated production and have either used their own semiconductors or used semiconductors from suppliers they part own (Keiretsu partners). These barriers to market entry look set to disappear as vehicle manufacturers from other regions ramp up production and Japanese vehicle manufacturers look for competing semiconductor vendors.
As is always the case with automotive applications, semiconductors for electric vehicles must meet demanding performance requirements and must been keenly priced. However, according to the IMS Research report, the market could be worth over $7 billion USD in 2020. As world economies struggle to recover from the recent economic downturn, this developing market could provide suppliers with a rare opportunity for substantial growth.