Model Y cars are pictured during the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, March 22, 2022.
Patrick Pleu | swimming pool | via Reuters
Shares in some chipmakers fell Thursday after electric vehicle maker Tesla announced it would sharply reduce the use of silicon carbide transistors in its next-generation vehicle powertrains.
At Tesla’s 2023 Investor Day presentation on Wednesday, which focused primarily on efficiency and cost control, head of powertrain technology Colin Campbell took the stage to show how the company plans to reduce the cost of its cars’ powertrains while at the same time maintain high performance and energy efficiency.
Campbell revealed: “In our next powertrain, the silicon carbide transistors I mentioned are key components[s] but expensive, we found a way to use 75% less without sacrificing the car’s performance or efficiency.”
shares of ON semiconductor And ST microelectronics each lost about 2% while wolf speed fell about 7% as investors feared Tesla’s moves could be a harbinger for the auto industry.
Campbell also said that Tesla’s new powertrains will include motors built without rare earth metals. raw material supplier, MP materialsknown for supplying automakers with neodymium, fell about 11% in response.
Campbell didn’t say when the next-generation powertrain would be ready for mass production and use in the company’s vehicles, nor did he indicate how much it’s currently spending on those transistors. Event executives didn’t reveal any specific details about the “next-gen” Tesla, which some analysts are calling the Model 2.
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Chips made with silicon carbide transistors are commonly used in electric vehicles. In general, they can withstand more heat, have longer lifespans, and are more energy efficient than semiconductors made with silicon power transistors, according to the Institute of Electrical and Electronics Engineers.
Bank of America analysts called Tesla’s claims “remarkable but premature.”
However, the analysts conceded: “If true, this technological advance could pose a major risk for the SiC materials industry (WOLF, COHR, Rohm) and devices (ON and European competitors STMicro, Infineon – covered by Didier Scemama).”
They added the possibility that “cheaper [silicon carbide chips] could drive the adoption of EVs globally, so the content that providers are losing could be partially offset by greater volumes of EVs.”
Analysts at New Street Research were generally in agreement, writing in a note Thursday that Tesla’s announcement is actually a good thing for chipmakers, as they expect demand to remain high across the electric vehicle industry and beyond .
They wrote of Tesla’s announcement, “The new powertrain’s inverter will use a hybrid architecture” that mixes silicon and silicon carbide transistors, with both types of transistors working together to handle peak loads in a Tesla vehicle, primarily during vehicle acceleration. “This hybrid architecture is only for the new platform, ie a low-cost, small car with lower performance, and will not be adopted for existing models (S, X, 3, Y) or the Cybertruck.”
New Street doesn’t expect a lower-priced, next-generation Tesla vehicle “to start gaining volume before 2025 or 2026.”
Wells Fargo analysts remain overweight shares of Wolfspeed and OnSemi with a $110 target price for Wolfspeed and a $95 target price for OnSemi.
Wells Fargo analysts quoted Yole Group in a note on Thursday as saying the silicon carbide chip supply chain will remain tight in the near term due to strong demand from automakers across the board. Any growing EV maker will look to scale while controlling costs, but in the short term they will be more concerned about securing a supply of silicon carbide chips for their new models, many of which are due to launch this year and next, he said she .
— Michael Bloom contributed to this report.
Clarification: This post has been updated to clarify that MP Materials is a raw material supplier.
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