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Wed, Oct 5, 2022
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EV chip costs may exceed battery costs, says China car vendor

Nuying Huang, Taipei; Kevin Cheng, DIGITIMES Asia 0

Credit: AFP

With Bosch and other tier-one suppliers looking to negotiate higher chip prices with customers, the cost of electric vehicle (EV) chips may exceed that of batteries, according to China-based WM Motor Technology.

Industry sources suggested that EV makers are currently troubled by constant material price hikes, component shortages, as well as environmental factors that may erode consumers' ability to purchase new vehicles. The sources said that EV demand is likely to drop if EV prices continue to rise to reflect production costs.

Analyzing WM Motor CEO Freeman Shen's recent remark that EV chip costs may surpass battery costs, the sources said that lithium batteries on average cost about 10 times more than automotive chips, so that Shen was likely referring to the costs of products that use ICs rather than the chips themselves.

The sources also noted that competition for materials and components is more heated in China than in other countries. As a result, China EV makers may be facing a different set of circumstances than their foreign peers, the sources said.

Demand for smart vehicle functionalities in China is also different from that in other markets, the sources continued. China, for example, has the highest LiDAR adoption rate in the world, while other countries are seeing lower adoption rates due to high LiDAR costs and low number of Level 3 autonomous vehicles, the sources pointed out.

As the costs of automotive chips and batteries continue to increase, EV makers are worried that some customers may cancel their orders due to rising EV prices. Currently, China-based EV makers NIO, XPeng, Li Auto, and WM Motor are all facing component shortages, while BYD remains relatively unaffected thanks to its own chip and battery manufacturing plants.

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