In 2025 we expect to see sales of electric vehicles hit 7 million a year, making up 7% of the total vehicle shipments, and with the shift towards an electric drive chain comes a whole lot more semiconductors.
To a car mechanic the electric transmission means reduced complexity, but to the semiconductor vendor it means a significant opportunity for an industry which has (for the last decade) been relying on smartphones to push innovation and drive growth. Government subsidies are still important in achieving that level of adoption, but the trend is irreversible.
My colleague Michael Ramsey wrote a useful research note on the wider implications of this trend, which will have far-reaching impacts. Roadside gas stations, for example, will struggle as the majority of recharging happens at home, and simplified vehicle construction (invariant gearbox, no exhaust, fewer moving parts) will change the vehicle supply chain. On the other hand; EVs are going to be an important driver of semiconductor growth
Between 2018 and 2023 Gartner forecasts that growth in EV semiconductors will be more than 22%, with wide bandgap semiconductors (used in power transistors for EVs) already showing 55% growth in 2018, but the flexibility of the electric motor is pushing them into a range of new applications.
Electric motorcycles have been around for a few years, notably from Zero (my personal ride), but with Harley Davidson and Vespa now in the market we can expect rapid growth. The development of electric motors can even challenge what we consider to be a “vehicle”. The Dualtron Thunder, for example, is a scooter with a 75-mile range and a top speed of 15mph, featuring fingerprint ignition and ABS. It might look like a scooter, but it can do some serious driving, and contains some serious semiconductors.
Tesla might be the poster child for electronic transportation, but the revolution is much bigger than the electrification of private cars, and so is the opportunity for semiconductor manufacturers.