Articles


2022-12-05

Global Car Sales Are Projected to Reach 81.1 Million Units for 2022 and Rise Slightly to 84.2 Million Units for 2023

Due to persistent production constraints in 2H22, TrendForce estimates that global car sales will reach 81.1 million units for 2022, showing either a mostly flat growth or small decline from 2021. Regarding 2023, the shortage of automotive semiconductor components will ease in the first half of the year, and carmakers will be ramping up production in order to reduce the pile of backlogged orders. However, the global economic environment is expected to remain challenging, so global car sales for that year are now forecasted to increase marginally by 3.7% YoY to 84.2 million units. On the whole, car production is not expected to return to the pre-pandemic level before 2025.

NEV Sales Will Rise to 14.2 Million Units for 2023

Looking at the entire global electric car market, vehicle sales are projected to grow by 43% YoY to 13.6 million units for 2022. Sales of new energy vehicles (NEVs) are projected to rise by 55% YoY to 10.1 million units for 2022 and will then climb to 19.4 million units for 2023. NEVs as a category does not include hybrid electric vehicles (HEVs) that still have an internal combustion engine. The trend of vehicle electrification continues across many regional markets. However, countries have different policies for supporting electric cars because they vary with respect to the progress made in the development of electric cars and related infrastructure. China and some European countries have already enter the phase where subsidy support for purchasing an electric car are being gradually reduced or eliminated. Conversely, the US and other emerging markets are expanding subsidy support.

Safety Functions Required Under EU’s New General Safety Regulation Will Become Mandatory in 2024 and 2026

To ensure safe operation for new types of vehicles that are entering the European market, the New General Safety Regulation (EU) 2019/2144 finally came into force this July. This regulatory framework mandates that all on-road vehicles will conform to a set of new specification requirements and enhanced safety standards. The application of the rules under the regulatory framework will be implemented over successive phases. Many advanced safety functions will be made mandatory in 2024 and 2026. This, in turn, will help generate the demand for automotive cameras (located inside and outside of a vehicle), sensors (e.g., LiDAR), networking components, and data recording solutions. All in all, the New General Safety Regulation is worth the attention of suppliers for automotive technologies. The rules under this framework also serve as a useful reference for other countries that are developing similar policies and laws.

Commercialization of Autonomous Vehicles Is Growing in Importance

Investments in the development of autonomous vehicles can only be sustained if cases of their commercialization start to appear. Hence, robotaxi companies are searching for feasible ways to commercialize their services and create a viable business model. Chinese robotaxi companies, for example, are enhancing the controllability of the traffic environment, reducing the unit cost of vehicles, and hooking up with ride-hailing platforms. TrendForce believes Mainland China will continue to be the fastest-growing regional market for robotaxi services in 2023.

(Image credit: Tesla Linkedin)

2022-11-25

Catching Up on Tesla, See The Big Rise of Chinese Automotive Brands

TrendForce’s latest research finds that global sales of new energy vehicles (NEVs), which encompass battery-electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and fuel-cell vehicles (FCVs), rose by 70% YoY to 2.87 million units for 3Q22. Of the quarterly total, BEV sales accounted for 2.147 million units and registered a YoY growth of 75%, whereas PHEV sales accounted for 714,000 units and registered a YoY growth of 57%.

Tesla placed at the first place in 3Q22 BEV market, BYD is the biggest threat

In the global ranking of BEV brands by vehicle sales for 3Q22, Tesla took first place with 344,000 units. While Tesla managed to maintain its market share at 16%, its lead over second-placed BYD in sales figure had narrowed further. BYD sold 259,000 BEVs in 3Q22, posting a massive YoY growth of 182%. It is also worth noting that the gap between Tesla and BYD in BEV sales has been smaller than 100,000 units for two quarters straight. SGMW and Volkswagen respectively stayed at third and fourth in the ranking, showing no change from the previous quarter. As for fifth to 10th, TrendForce especially points out that these places were all taken by Chinese brands. Looking at the global top 10 BEV brands for 3Q22, MG Motor (that has been acquired by SAIC Motor) and Geometry entered this group for the first time mainly thanks to the robust demand from China. Conversely, Hyundai, Kia, and XPeng Motors were pushed out of the top 10. XPeng stated that the deliveries of its new electric SUV G9 would ramp up this October. Whether XPeng will remain in the group of top 10 for 2022 depends on its performance in the fourth quarter.

Huawei’s big plan in the automotive market: the rise of Chinese brand “AITO”

Turning to the global ranking of PHEV brands by vehicle sales for 3Q22, BYD was at the top with 279,000 units and held a market share of 39.1%. As for other PHEV brands, they still were unable to raise their market shares above 10% even though they posted a QoQ increase in vehicle sales. Looking at the two German luxury car brands that are involved in the PHEV segment, Mercedes-Benz rose to second place in the ranking because of a QoQ gain for vehicle sales in both the home market and China. BMW saw falling sales for its PHEVs in Europe, so it posted a decline in units and slipped down in the the ranking. Chinese brand AITO entered the group of the global top 10 PHEV brands for the first time in 3Q22 and was immediately placed fifth. AITO is a brand under Seres and is in close cooperation with Huawei, and its vehicle models feature many technologies from Huawei as well. Going forward, the market performances of AITO’s vehicles will actually be an important indicator of Huawei’s progress in the development of an automotive business.

Moving into 4Q22, TrendForce believes that autumn releases of new vehicle models and year-end promotional activities will be the main drivers of car sales worldwide. Consumers have been waiting for new vehicle models or new generations of the existing vehicle models. This is one of the reasons why some carmakers saw declining vehicle sales in 3Q22. Therefore, these same carmakers could still get a boost in annual vehicle sales from their performances in the fourth quarter. As for the Chinese NEV market, it will stay fairly hot in 4Q22 as car brands operating there continue to provide incentives for vehicle purchases. Furthermore, Chinese consumers still want to take advantage of their government’s NEV subsidy program before its termination.

2022-11-18

Foxconn and Saudi Arabia Have Formed Automotive Joint Venture That Will Start Selling Electric Cars by 2025

Foxconn (Hong Hai Precision Industry) and Saudi Arabia’s Public Investment Fund (PIF) have agreed to jointly establish an electric vehicle (EV) brand named Ceer. PIF is Saudi Arabia’s sovereign wealth fund, and Ceer will operate as a joint venture of the two parties. As the country’s first EV brand, Ceer will target not only the home market but also the wider regional markets of the Middle East and North Africa.

Saudi Arabia represents largest car market in the Middle East. The country’s new car sales totaled 580,000 vehicle units for 2021. This year, however, has seen a decline with the figure for the first three quarters coming to 290,000. Until now, Saudi Arabia has no home-grown car brand, and there is no carmaker indigenous to the Middle East. Presently, Toyota and Hyundai are the two main automotive groups operating in Saudi Arabia. The former’s and latter’s market shares in the country come to 34% and 18% respectively. Also, since Saudi Arabia is one of the world’s major oil producers and has kept gas prices low for its citizens, the conditions of its car market give an absolute advantage to vehicles powered by fossil fuels. Up to recently, Saudis have had no real incentives to invest in the development of electric cars and the build-out of the supporting infrastructure. In terms of “green” offerings, the Saudi car market so far has only received hybrid electric vehicles (HEVs) from a few automotive brands (i.e., Toyota, Lexus, and Hyundai). Among countries in the Middle East, Israel is currently the leader with respect to EV availability.

Even though Saudi Arabia continues to build its wealth primarily through the exportation oil, it is now driven by government policies and the momentum of reform to develop a domestic EV industry. For instance, the Saudi government is promoting electrification for at least 30% of the vehicles operating in the country’s capital Riyadh by 2030. However, this target is not mandatory. Turning to the creation of a home-grown EV brand, this joint venture with Foxconn is also among a series of actions taken by the Saudi government to reduce carbon emissions, adopt green energy, and reform the country’s economy. More measures need to be implemented to support the growth of a domestic EV industry. After all, the Saudi Energy Ministry just completed the regulatory framework for EV charging stations this August.

Among EV brands and startups, the most noticeable ones tend to come from the US and China because these two countries are the world’s major car markets and possess enormous domestic demand. On the other hand, opportunities are also brewing for new entrants in the emerging markets that are promoting vehicle electrification. The UAE, for example, has a local EV startup named Al Damani that begun small-scale production this June. TOGG, which is another newly formed company, commenced production on Turkey’s first EV this October.

Commenting on the formation of Ceer, TrendForce said it is very difficult for EV startups to grow their businesses especially if they are operating in countries without an existing automotive industry. Usually, these new companies will have to poach talents from the more established automotive companies and obtain licenses for certain key technologies. Ultimately, they will have to draw enough support from the automotive supply chain in order to have a chance to push their vehicles to the mass production stage. Additionally, while dealing with the complexity of vehicle assembly, startups will have to quickly scale up production in order to control their costs. All of these challenges have to be overcome by rising EV manufacturers that are located in emerging markets.

2022-11-17

Taiwan’s Version of “CHIPS Act” Provides 25% Tax Credit for Major Semiconductor Companies to Pursue R&D and 5% Tax Credit for Investments in Advanced Manufacturing Equipment

The government of Taiwan is preparing to launch its version of “the CHIPS Act” to support locally operating companies that develop innovative technologies and have a crucial spot within the global supply chain. A highlight of this legislation is a tax credit scheme: a maximum of 25% for R&D in “forward-looking technologies” and another 5% for investments in advanced manufacturing equipment.

According to the draft of this proposed legislation, companies that play an important role in the global supply chain and engage in technological innovation within the jurisdiction of Taiwan (the Republic of China) are eligible for the aforementioned tax credits if they also meet certain other conditions. As for the limit of the two tax credits, neither one of them can exceed 30% of the business income tax for the current year. Together, they cannot exceed 50% of the same annual business income tax.

Companies that will be applying for the tax credits must meet three general conditions. First, applicants must pay an effective tax rate of at least 15% in accordance with OECD’s minimum tax rules for multinationals. Second, applicants must reach a certain scale for the ratio of R&D spending to revenue (R&D intensity) and equipment-related investments. The minimum thresholds for the R&D intensity and equipment-related investments have yet to be determined and will likely be set within the subsections of the legislation later on. Lastly, applicants must not have incurred a major regulatory violation concerning environmental protection, labor protection, food and drug safety, etc. in the past three years.

Taiwan’s Ministry of Economic Affairs stated in a recent announcement that the island’s industries are deeply enmeshed within the global supply chain. They thus have become the backbone of the global economy and international commerce on account of their “uniqueness” and “irreplaceability”. The ministry added that local industries will have to adapt to the changing landscape of cooperation and competition in order to retain their indispensable role.

The ministry also commented that in the wake of a series of major events that have disrupted the operation of the global supply chain, many countries have initiated industry development policies that seek to improve the resiliency of their key economic sectors and strengthen their national security. These policies tend to emphasize the followings: (1) the formation of an autonomous and stable domestic supply chain; (2) the need to achieve dominance in next-generation technologies; and (3) the provisioning of large subsidies and tax incentives so as to raise domestic production and attract investments from multinationals. The ministry further asserted that as international competition gets fiercer, Taiwan must retain its existing advantages while finding other ways to further consolidate and enhance the positions of its key industries in the global supply chain. Therefore, the government finds it necessary to provide new tax incentives to support this kind of development.

2022-11-14

Scale of Global Market for ABF Substrates Will Grow at a CAGR of 16.4% in 2022~2026 Period; US Export Restrictions Will Influence Supply-Demand Dynamics of This Material

Shipments of CPUs, GPUs, and chipsets have been falling due to the weakening demand for PCs, gaming devices, and cryptocurrency mining machines. This recent development has also constrained the growth of the market for ABF substrates. Currently, the demand situation for this material is exhibiting signs of uncertainty.

Regarding the distribution of the demand for ABF substrates, applications that are driving growth are cloud services, AI, and automotive electronics. CPUs, GPUs, FPGAs, and switch ICs are chips that are deployed in servers purposed for a wide range of applications related to cloud services and endpoint AI technologies. Meanwhile, other AI-related applications require high-end ASICs. At the same time, more and more high-end SoCs and MCUs are embedded in vehicles. All in all, these aforementioned applications will spur the demand for ABF substrates. Additionally, package size continues to increase for high-performance ICs. This trend, too, will sustain the demand for ABF substrates over the long haul. By contrast, the PC market has matured, so the related demand is shrinking. From a long-term perspective, the influence of the PC market on the demand for ABF substrates will gradually wane.

TrendForce forecasts that the scale of the global market for ABF substrates will expand from US$9.3 billion in 2022 to US$17.1 billion in 2026, thus showing a CAGR of 16.4%. Due to the influence of the US technology export restrictions against China, the demand for ICs purposed for HPC will be higher than expected for the period from 4Q22 to 3Q23. This, in turn, will also further raise the demand for ABF substrates.

Then, starting from 4Q23, exports of HPC chips to China will start to slow down. However, demand will continue to grow for ASICs, AI chips, SoCs, and MCUs at that time. The growth in these application segments will offset some of the negative effect of the US export restrictions on the market for ABF substrates. In terms of the supply-demand dynamics of ABF substrates, a balance will gradually be attained in 2024. However, demand will get stronger in 2025 and 2026, so supply could tighten during that two-year period.

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