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Battery EV market introduces new technologies and supply chain to drive next stage of adoption

EV market trends to address the gap between early adopters and mainstream drivers.  

The electric vehicle (EV) market has been slowing down globally since the second half of 2023, but the long-term outlook remains positive as progress in technology development and manufacturing are expected to remove the bottlenecks limiting further adoption.

The battery EV market is currently facing the challenge of bridging the chasm between early adopters and the early majority in the mainstream market.

Today, Yu Yang, Principal Analyst, Automotive Semiconductors at Yole Group presents an insightful overview of the automotive industry and the key ongoing electrification trends. This comprehensive analysis delves deeply into the current market landscape, offering a detailed examination with a special focus on the Chinese ecosystem.

The current EV slowdown is occurring in different regions for reasons. In China, battery EVs have reached a 23% share of the light duty vehicle (LDV) market but have now come up against limitations in the technology that are hampering further adoption.

While there is a good number of public chargers, northern China experiences cold weather in winter that reduces battery range and increases charging times. This is preventing more drivers from making the switch from internal combustion engine (ICE) vehicles.

Meanwhile, in Europe and US, adoption lags at 15% and 7%, respectively. This is partly because there is no local battery industry to support the growth of EV manufacturing. Automakers have to import batteries from Asia, which makes EVs more expensive for European and US buyers than Asian buyers. In addition, charging infrastructure has yet to catch up with demand – the EV to public charger ratio in 2022 was 16:1 in Europe and 21:1 in the US, compared with 7:1 in China.

In the coming years, three key trends in electrification are likely to help solve users’ “range anxiety”, driving EV adoption forward: new battery technologies, super high-power charging infrastructure and high-voltage architecture.

Battery manufacturing adapts to market needs

Chinese battery material manufacturers are making good progress in developing new chemistries to increase energy density,, increase charging speed, and decrease cost – such as new LFP batteries with high C-rates, semi or all solid-state batteries, sodium batteries. They are also working to further improve battery packs.  The increasing production of battery cells with faster charging rates, from 3C to 6C, can also help to solve range anxiety.

This will enable an improvement in EV performance in the coming years, which Yole expects to reduce the bottleneck in China.

Over the last three years, there have been massive investments in local battery manufacturing In Europe and the US.  Yole’s research indicates that local battery manufacturing facilities will materialize and ramp up production in late 2025 and early 2026, which will make EVs more competitive on price in those regions.

High-power charging infrastructure to allay drivers’ concerns

The ready availability of fast chargers is also key to moving EV purchases on from early adopters to mainstream drivers. If drivers are confident that they will be able to easily access a charger away from home much like they can access a gas station, they will be more likely to make the switch.

Yu_YANG-YYA_YINT
Yu Yang Principal Analyst, Automotive Semiconductors at Yole Group.
If you can charge a battery very fast and you have a lot of faster chargers, then can quickly charge the car and you don’t have that range anxiety at all. This makes using an EV much easier and we believe that will be helpful for adoption.

For this reason, Chinese original equipment manufacturers (OEMs) are pushing for faster adoption of 250kW+ chargers. Other regions are likely to see a 2-3 lag as they have further to go in rolling out charging infrastructure.

High-voltage architecture to speed up charging

Along with the installation of fast chargers, moving from 400V to 800V vehicle architecture will enable cars to charge much faster. Increasing voltage means that the current does not have to increase current as much.

The transition to 800V is lifting demand for silicon carbide (SiC), a wideband gap technology preferred for higher voltages that is increasingly being used in vehicles and charging infrastructure.

The supply chain is changing rapidly as Chinese players are entering the market, bringing down prices of expensive SiC substrate.

Yu Yang from Yole Group
There is more vertical integration in the supply chain. From the upstream to downstream we are seeing more and more Chinese players. The quality of some of the Chinese products is now high and when Chinese players come into a market it’s always with huge capacity, so prices are coming down quickly. They are bringing down the total cost of silicon carbide, which will be beneficial to the adoption of this technology globally.

This is putting pressure on established international producers of SiC substrates, which are now facing a price war.

In response, substrate manufacturers are shifting their focus to devices and Chinese companies are moving from fabless modular packaging to IDM.

Yu Yang from Yole Group
As we see the Chinese players moving into IDM mode, in the coming years some of them will also provide high quality devices. This will start another price war and then prices will come down quickly. We are seeing a similar trend on the module and system side. OEMs and Tier 1s are all moving more to the upstream, to the modular manufacturing themselves, squeezing the conventional suppliers’ business.

Policy continues to shape EV markets

As with many new technologies, policy support is key to subsidizing EV adoption until the market is competitive on it own.

While China’s EV sector has become market driven, the US and European sectors are still policy driven.

The US has recently announced an increase in its tariff on imports of EVs from China to 100%, although this will have less impact than European policies as the US in not a major importer of Chinese EVs.

The European Commission is conducting an anti-subsidy investigation into the import of EVs from China, which could result in an increase in the current 10% tariff.

European manufacturers are moving to compete with low-cost Chinese models, with Citroen launching Europe’s first budget model, the eC3, and France’s Stellantis working with China’s LEAP Motor to import low-cost motors and reduce its vehicle prices.

For its part, China is pushing the export of EVs – which have already reached 20% to its major markets in Europe and Southeast Asia.

Chinese manufacturers are increasing their local production in countries such as Thailand, Indonesia and Malaysia to boost sales. This has also resulted in rapid EV adoption in those markets – for instance Thailand has a 12% EV penetration rate that is higher than the US.

A wave of Chinese OEMs, together with battery suppliers are either building or kicking off the process of local manufacturing capacities in Europe, which will surely contribute to the transition to an electrified mobility.

Stay tuned as Yole Group continues to monitor the global electrification transition.

About the author

Yu Yang, PhD is Principal Analyst, Automotive Semiconductors at Yole Group.

Based in Belgium, he is engaged in the development of technology and market products, dedicated to mobility electrification, and especially automotive industry. Yu is deeply engaged in coordinating all studies and activities within the automotive industry.

Prior to Yole Group, Yu worked as a business development partner and R&D project leader at Punch Powertrain N.V. (Belgium), R&D project manager at Bekaert N.V. (Belgium), and doctorate researcher at IMEC (Belgium).

Yu Yang holds a PhD in materials engineering from Leuven University (Katholieke Universiteit Leuven) in Belgium and a master’s in electrical engineering from Tsinghua University (China).

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