Several separate issues are making the sales of hybrids and EVs less certain than the automotive industry’s early predictions. “Many electrified-vehicle customers remain highly brand-conscious,” Riches said. These consumers “will not pay prices inflated above that brand’s normal price range in order to access electrified vehicles.”
An example is Renault’s Zoe. A website called Insideev.com recently reported that “registrations of the Renault Zoe fell again in France to 198, which is lowest since January and over 5 times lower than the sales peak in March.” Because Zoe is the nation’s most popular EV, “when ZOE goes up or down, the whole EV market seems to follow in France,” the website’s story said. As popular as the Renault brand is, it appears that not many consumers are prepared to pay extra for Renault’s EV.
Second, “[The HEV/EV] market is not yet rational,” Riches said. “EV is an emotional purchase.” He pointed out that the highest sales of HEV/EV are in the United States, where fuel prices are much lower than in Europe or Asia. “Consumers are not buying HEV/EV just to save gasoline,” he said. Rather, they’re making a statement.
Third, unique vehicles have generally outperformed HEV/EV variants of existing vehicles, according to Strategy Analytics.
Cherry-picking by non-traditional players
Not included in the discussion of automotive semiconductor demand is the car infotainment market, such as the automotive wireless segment.
“Wireless technologies like Bluetooth and embedded cellular are accelerating in the car business with market revenue set to rise by 41 percent from 2012 through 2018,” according to an Automotive Infotainment Market Tracker Report from information and analytics provider IHS.
The IHS report says:
Revenue for wireless solutions in cars will reach a projected $1.17 billion this year, up a respectable 5 percent from 2011. While growth this year has moderated from the sizable double-digit increases of 2011 and 2012, continued expansion is assured in the years ahead. Expansions in the 8 percent range are expected during both 2014 and 2015.
This trend provides an opening to non-traditional automotive chip companies such as Broadcom, Qualcomm, and Nvidia. Speaking of the power of those “new entrants with consumer-market scale,” Riches observed, “they are potentially cherry-picking some high-growth areas.”
As a starter, Broadcom’s aggressive move into the automotive market is driven by its invention of BroadR-Reach Ethernet, and the company’s latest 802.11ac/Bluetooth Low Energy combo chip. By leveraging its first-mover’s advantage on a soon-to-grow gigabit wireless application for home networking, Broadcom is eager to sell automotive-qualified 802.11ac into the automotive market.