Shortage of Chips a Challenge for Vehicle Electrification

Electric Vehicle (EV) market growth, along with the bourgeoning investments in autonomous driving and infotainment systems that constitute the automotive end market, is a top-line revenue boost for chip manufacturers and suppliers. Deloitte forecasts EV sales to increase by twelvefold from 2020 to 2030, while IHS Markit research expects the growth to be fivefold, i.e., from 2.5 million vehicles in 2020 to 12.5 million in 2025. With an average EV having double the number of chips (2000 chips) as its fuel-powered counterpart, there is significant pressure on chip manufacturers to experiment with faster and cheaper manufacturing techniques and assembly lines. Biden’s plan to electrify more than half of the new vehicles by 2030 largely depends on the US investment in chip production. After the bill “CHIPS for America Act” received no vote from the House of Representatives at the Senate, the target of achieving green automotive by 2030 is at risk. We already have a renowned vehicle manufacturer temporarily shut their EV production factory, and we also have another player delay the delivery of their EV s for weeks, all because of a shortage of semiconductor chips. To make up for these losses, the latter plans to sell out the vehicles crowding in their factories without rear air conditioning and heating controls at a reduced price. Alternatives to silicon chips for better performance, faster methods of chip production, and various collaborations or partnerships for efficient EV models are expected to mitigate the perturbation to electrify vehicles.

EVs are computers on wheels, with everything from airbags to powertrains being powered by silicon chips, it’s about time we switch to new chip materials for faster charging and improved range. Now, what are the better alternatives for traditional silicon chips? Well, silicon carbide and gallium nitride perform a better job in converting power with minimum losses. Moreover, there is an anticipation for the charging hours to be reduced to half. This shift to new alternatives is crucial for the adoption of EVs and for automakers to introduce/manufacture new lines of green-powered vehicles. Tesla is one of the early adopters of silicon carbide chips sourced from STMicroelectronics NV, and we have Toyota follow Tesla’s footsteps with their silicon carbide-hydrogen powered vehicle, Toyota Mirai. The power inverters used by Stellantis NV, formed by a collaboration between Fiat Chrysler Automobiles and the PSA group, is expected to mass manufacture their new line of EVs using silicon carbide power converters. Gallium nitride as chips in automotive is yet to be explored, but we have BMW sign a semiconductor capacity agreement with GaN Systems Inc. According to Navita Semiconductors, the use of gallium nitride as semiconductors can reduce the time of EV charging from 11.3 to 4.7 hours, making EVs more feasible for everyday commute.  

New chip materials and intelligent manufacturing processes can help address the current chip shortage in the automotive industry. Chipmakers continue to produce conventional silicon chips as the hard make-up of silicon carbide makes it difficult to manufacture. Further, this restricts chipmakers from polishing large wafers without any defects on the surface. As a solution to this problem, Applied Materials have come up with a new tool that can polish 200 millimeters wide wafers. This increase in wafer size can double the output and considerably lower the pricing. The recent announcement of an American multinational technology corporation entering the automotive space with their new car division focused on modernizing the driving experience is subversive. They are expected to spend $100 billion on 8 chip fabrication facilities, starting with the construction of their first factory in New Albany, Ohio, this year, and it ought to reinstate the US chip-making valor.

Collaboration and partnership between both small and large entities for battery capacity enhancements and new models of vehicles aim at the proliferation of EVs on roads. These collaborations can lay grounds for technologies that efficiently use chips for an intelligent interface. Battery, the functional unit of an EV, needs to be experimented upon for better performance and is the sole objective behind the collaboration between several battery manufacturers and automakers. Ashton Martin partners with British Volts to build high-performance batteries for their new line of fully electric vehicles set to launch in 2025. We have Stellantis, the parent company of Fiat, Dodge, and Maserati, enter into a pair of partnerships with Korean battery suppliers with a target of 5 million EV sales by 2030. Along the lines, GM motors partners with POSCO in Canada to open up a $400 million cathode material producing factory for their Ultium EV batteries. The Ultium EV batteries are part of a recent partnership between GM motors and LG. These partnerships for innovation paint a future picture of fierce competition in the EV market. To position themselves in the market, KIA aims at releasing two new EVS every year starting from 2023 and will have 7 of them by 2027. They already have their KIA EV6 hit the markets, and the EV9 SUV is planned to be out for sale in 2023. We also have Hyundai with plans of electrifying their vehicle models with an investment of about $16 billion, double its share in the EV market.

A lot is happening in and around the EV market, some of them being hard to digest, especially with the shortage of chips to meet the ever-growing line of EV models. Efforts on chip manufacturers and automakers end to find alternatives to silicon wafers, new assembly lines or tools for quicker turnaround, and new efficient models of EV can help achieve the electrification targets for a sustainable today and tomorrow.