Model Y cars are pictured through the opening ceremony of the brand new Tesla Gigafactory for electric cars in Gruenheide, Germany, March 22, 2022.
Patrick Pleu | Pool | via Reuters
Shares in some chip makers dipped on Thursday after electric vehicle maker Tesla said it plans to greatly reduce using silicon carbide transistors in its next-generation vehicle powertrains.
At Tesla’s 2023 Investor Day presentation on Wednesday, which largely focused on efficiency and controlling costs, powertrain engineering leader Colin Campbell took the stage to point out how the corporate plans to cut back the fee of their cars’ powertrains, while keeping performance fast and energy-efficient.
Campbell revealed that, “In our next powertrain, the silicon carbide transistors that I discussed, which are key component[s] but expensive, we discovered a approach to use 75% less without compromising the performance or the efficiency of the automobile.”
Shares of ON Semiconductor and ST Microelectronics were each down greater than 4%, while Wolfspeed dropped greater than 9% and MP Materials greater than 12% in mid-day trading, as investors frightened that Tesla’s moves can be a harbinger for the automotive industry.
Campbell didn’t say when the corporate’s next-generation powertrain can be ready for top -olume production and use in the corporate’s vehicles, nor did he specify how much it spends on these transistors today. Executives on the event didn’t reveal any firm details concerning the “next gen” Tesla, which some analysts consult with because the Model 2.
Chips made with silicon carbide transistors are widely utilized in electric vehicles today, generally withstand more heat, have an extended life and are more energy-efficient than semiconductors made with silicon power transistors, based on IEEE.
Bank of America analysts called Tesla’s claims “notable but premature.”
They acknowledged, “If true, this technological advancement might be a serious risk for the SiC materials industry (WOLF, COHR, Rohm) and devices (ON and European peers STMicro, Infineon – covered by Didier Scemama).” They added the chance that “cheaper [silicon carbide chips] could drive up EV adoption globally so what vendors lose on content might be partially offset by greater EV volumes.”
Recent Street Research analysts agreed generally, and wrote in a note on Thursday, that the announcement from Tesla is definitely an excellent thing for chip makers as they expect demand to stay high throughout and beyond the EV industry.
They wrote of Tesla’s announcement: “The inverter of the brand new drivetrain will use a hybrid architecture,” that mixes silicon and silicon carbide transistors, with each kinds of transistors working together to handle peak loads in a Tesla vehicle, primarily through the vehicle’s acceleration. “This hybrid architecture is for the brand new platform only, i.e. a low-cost, small, lower-performance automobile, and is not going to be adopted for existing models (S, X, 3, Y), or the Cybertruck.”
Recent Street doesn’t expect a lower-priced, next generation Tesla vehicle to “ramp in volumes before 2025 or 2026.”
Wells Fargo analysts are maintaining an obese rating on shares of each Wolfspeed and OnSemi with a price goal for Wolfspeed of $110 and a price goal for OnSemi of $95.
Citing Yole Group in a note on Thursday, Wells Fargo analysts said near-term, the silicon carbide chip supply chain will remain tight on account of strong demand from automakers across the board. Every growing EV maker will seek to scale up while controlling costs but within the near-term, they will probably be more concerned about securing a supply of silicon carbide chips for his or her recent electric vehicle models, a lot of that are set to launch this yr and next.
—Michael Bloom contributed to this report.
