Electrification: is it now? Not really… – Automotive 2023 review, part I

BEV is good but the industry still needs hybrid technologies during electrification transition period.

The end of the year is almost there, and Yole Group’s analysts take a step back to identify and analyse 2023 key automotive facts & figures. Was it a special year? Did we see the explosion of EV, HEV and others, as we expect for a long time? Could we say that electrification is here? Or maybe will it be for tomorrow? 2024?

According to the Power Electronics for e-Mobility 2023 report from Yole Group, vehicle electrification is speeding up globally with major markets. The global light duty (LD) vehicle market will reach 93 million units in 2028, with 53.5% market share of xEV. Among various electrification technologies, BEV leads the market with 22.1% CAGR between 2022 and 2028, while the xEV annual growth in the same period is 16.7%

Yole Intelligence’s analysts, Yu Yang and Pierrick Boulay deep dive into this automotive electrification sector and look ahead to highlight the market and technical trends, the ecosystem evolution, and its emerging players. This is a Yole Group’s review. Take a coffee and have a sit. Yole Group tells you the story.

This review is based on Yole Group’s automotive collection. Discover HERE an overview of all automotive analysis including Automotive Teardown Tracks, automotive market & technology reports…

Yole Intelligence and Yole SystemPlus are Yole Group’s companies.

In the second half of 2023, there are signs of a slowing down in the rate of electrification in the global automotive market.  

This is no surprise for long-term Yole customers, as the actual BEV adoption speed is rather in line with Yole Group forecasts, which has been more moderate. There is no doubt electrification is an established trend, but it will not happen overnight.

Yu Yang Principal Technology and Market Analyst, Power Electronics at Yole Intelligence, part of Yole Group, within the Power & Wireless division.
It will take decades for full electrification and forecasts include the various hybrid technologies which will fill the gap during the transition period.

Battery technology, for example, has made huge progress in the past few years but still BEVs cannot cover all the different user scenarios. For very small cars it is better to adopt BEV over any of the other powertrains, and in some high-end cars, BEV has a huge advantage because it offers superior performance, but the volume for these vehicle categories is low. For most of vehicles, the saloon or family car models, mostly the only vehicle in a family, then the limitations of BEVs are clear: upfront purchasing cost, driving range, charging speed and availability, range reduction in cold and hot environments, huge range anxiety in long journeys, etc. All these limitations leave rooms for various hybrid technologies. Thanks to the cost down of batteries, PHEV and REEV (strictly speaking, also PHEV) are gaining market share, especially in China.

The total annual market for Li-ion battery packs for BEV and PHEV will grow from around $70 billion in 2022 to about $180 billion in 2028, with a 16.9% CAGR during this period, announces Yole Group in its Battery Pack for Automotive report.

In addition, the rapidly growing EV market and growing needs for faster vehicle charging increase interest in EV DC charging solutions. The EV DC charger system market is showing a significant CAGR: about 19.1% between 2022 and 2028 (Source: DC Charging for Automotive report, 2023). Despite a dynamic context, finding an optimal business case for the charging infrastructure business is a very complex task. Positioning along the supply chain, matching with regional regulations and the market environment, the electricity grid code and power line capacity, customer needs, EV deployment, EV architectures and battery power and energy capacities are crucial. For daily commuting, i.e., traveling less than 500km per week, and charging at home or at work, the BEV is perfect.

As the total economy forecasts of 2024 is rather moderate, plus the interest rising in almost all major economies, we are not expecting large steps in BEV adoption, although it is sure to see global increases of BEV and higher growth of PHEV (including REEV) in China.

A rather positive momentum in electrification is the adoption of 800V platforms. At Yole Group, the progresses have been closely followed up, and identified three key enablers of 800V adoption: cost down of SiC substrates; launching of 800V vehicle models; high power (>250kW) charging infrastructures. All three demonstrate positive momentum in 2023, and surely will continue in 2024.

Changes to the ecosystem

This year, in addition to the progress in major markets like China, Europe, America, Yole Group’s analysts also point out acceleration for electrification in some developing countries, for example Southeast Asia. Therefore, quite some countries are looking for opportunities in this mega trend, which are mostly countries with quickly increasing vehicle markets. New brands are setting up, which provides existing Tier 1 and Tier 2 suppliers new business landscape, while their available market in the developed world is under pressure due to OEMs’ increasing in-house manufacturing.

BYD, has progressed very quickly in the last two to three years and it is highly likely that it will overtake Tesla to become the number one BEV OEM.

It is a large vertical integrator, producing its own battery, power electronics and a wide range other semiconductors in-house. As a result, it has a secure supply chain and a cost advantage by producing some of the most valuable components in-house. More information: WHAT’S IN THE BOX? – BYD’s 8-in-1 electrification system at a glance.

Its speed of innovation is also impressive because it makes decisions without having to negotiate with several suppliers.

Another trend is a crossover by consumer companies.

Pierrick Boulay Senior Technology & Market Analyst in the Photonics and Sensing Division at Yole Intelligence, part of Yole Group
smartphone company, Xiaomi, will launch its new car in November 2023. And one of the world’s top ranked smartphone players, Huawei, has deeply involved in the automotive business; an indication of how similar the smartphone and vehicle user experience are.

Huawei latest news: more info.

In 2024, one of the key events worth of following is the launch of Xiaomi’s first models. There is no lack of new players of BEVs in the past decade, however, we expect the batch of consumer electronics giants, such as Xiaomi, Sony, and others, with high brand awareness and rich experiences in customer experiences and software, will bring some fresh and powerful momentum to the EV market.

Legacy players in 2023: still there?

Both General Motors (GM) and Ford have pushed back electrification plans and Volkswagen (VW) has downscaled some BEV production in Europe. The adjustments came with decreasing volumes in the order books. However, it is part of the whole picture, as some OEMs, for example Hyundai, is increasing capacity.  

It is interesting to see new strategies of legacy OEMs to go through the bumpy roads towards full electrification. In the past few months, some European OEMs have been engaged to partnership with Chinese players, who are regarded as more experienced in electrification. For example, VW with XPeng and also with SAIC, are likely to tackle the Chinese market.

More inspiringly, Stellantis is working with Chinese startup LeapMotor, which can provide a complementary vehicle platform for budget B-class vehicles, to deliver less expensive solutions relatively quickly for outside China.

While the US is pushing out China from its supply chain due to geo-political tensions, this will surly slow down the electrification speed at least for the next 2 years.

All aspects combined, the slowdown of BEV adoption will continue in 2024, although full electrification is still a valid long-term goal. Apart from a new wave of PHEV/REEV adoption, several commercial and technical highlights are worth of following in 2024: taking off of 800V and SiC adoption of more spreading brands, launching of first models from Xiaomi, cooperation between legacy OEMs and Chinese players, electrification and new brands in the developing world, such as ASEAN countries, etc.

Yole Group is covering the automotive industry for a while and is using its expertise in semiconductor technologies to deliver a valuable picture of this industry. Each month, the company releases key analyses to point out the technology choices made by the leading automotive companies and propose a comprehensive understanding of the supply chain and its evolution.

Without doubt, 2024 will be a strategic year for the automotive sector. Investments in 2023 were impressive and it will not stop here. The supply chain is continuously moving, pushed by the consumer companies…

Stay tuned on to get all year long up to dated information.

About the authors

Yu Yang, Ph.D., is a Principal Technology and Market Analyst, Power Electronics at Yole Intelligence, part of Yole Group, within the Power & Wireless division. Based in Belgium, Yu is engaged in technology and market studies of power electronics applied to mobility electrification with a strong focus on the automotive industry. Yu is also involved in other studies of power and automotive electronics at Yole Intelligence. Prior to Yole Intelligence, 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 Ph.D. in Materials Engineering from Leuven University (Katholieke Universiteit Leuven) in Belgium and a master’s in Electrical Engineering from Tsinghua University (China).

Pierrick Boulay is a Senior Technology & Market Analyst in the Photonics and Sensing Division at Yole Intelligence, part of Yole Group. He works in the fields of Solid-State Lighting and Lighting Systems, carrying out technical, economic, and marketing analyses. In addition, he leads the automotive activities within the company. Pierrick has authored several reports and custom analyses on topics such as automotive lighting, LiDAR, sensing for ADAS vehicles, and VCSELs. Prior to Yole, Pierrick has worked in several companies where he developed his knowledge of lighting and automotive. In the past, he has primarily worked in R&D departments on LED lighting applications. Pierrick holds a Master of Science in Electronics at ESEO (Angers, France).

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