Amid the growing trend toward connected, autonomous, shared, and electrification (CASE) in the automotive industry, vehicles are now much more than simply mechanical products but rather rely on contributions spanning the ICT, software, semiconductor, and optical sectors.
On the subject of tariffs, Kevin Wu, general manager of mobility at TÜV Rheinland Taiwan, admits that tariffs will definitely impact the development of smart vehicles, but will offer new opportunities for Taiwanese firms as well.
According to Wu, in 2024, automobile sales worldwide grew by 3% annually to 95.31 million vehicles, a sign that the market has reached a mature and stable phase, with growth deriving primarily from the introduction of new energy options and smart technology. However, vehicle sales in Taiwan dropped by 4% annually to 458,000 vehicles, mainly due to the government's proposed ratio of supply chain localization, requiring automakers to adjust their production strategies.
Furthermore, China and the US remained the world's largest automobile markets at 33% and 17% of the global share respectively, while India (4.9%) has leapfrogged Japan (4.6%) to become the world's third largest market for the first time. Among other emerging markets, Brazil and Mexico saw the most rapid growth.
Validation has now become an increasingly pressing issue as modularization has become a trend in automotive components. Under this trend, Tier 1 and Tier 2 suppliers need to engage in system verification at an earlier stage. In addition, updated international regulations have driven growing demand for EMC and safety testing prior to launch.
Car lights currently take the leading spot in Taiwan's automotive component exports, followed by electronic components and tires. In addition, the rise of electric vehicles and advanced driver-assistance systems (ADAS) has led to rising demand for testing smart lighting and electronic modules.
Furthermore, demand for aftermarket (AM) parts has surged, in part because of supply chain disruptions during the pandemic, as well as expected prolonged vehicle ownership due to the impact of Donald Trump's tariff policies.
According to Wu, the global market for automotive electronics is expected to grow from US$344 billion in 2024, to US$526 billion in 2030; while the production value of Taiwan's automotive electronics industry is projected to grow from NT$410.2 billion (approx. US$13.6 billion) in 2023, to NT$956.8 billion (approx. US$31.7 billion) in 2028. As electronic modules become a core component in the value of each vehicle, automotive electronics will account for an increasing share of overall costs, from growing 18–20% to 30%, and even above 35% in high-end EVs.
Under these circumstances, Wu notes that Taiwanese firms will need to find new opportunities to meet new demands, and collaboration with major system suppliers such as Bosch will be crucial. In addition, Southeast Asia has emerged as an option for Taiwanese manufacturers to diversify risk with the government's New Southbound policy. Moreover, Chinese automakers currently dominate the Southeast Asia market, and China-related demand will be critical regardless of how US tariffs evolve.
Article translated by Kevin Wang and edited by Jack Wu
