Tesla plans to reduce silicon carbide use, chipmaker shares decline
Model Y cars are pictured during the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, March 22, 2022.
Patrick Plu | pool | via Reuters
Shares in some chip makers fell on Thursday after electric vehicle maker Tesla said it plans to significantly reduce the use of silicon carbide transistors in its next-generation vehicle powertrains.
At Tesla’s 2023 Investor Day presentation on Wednesday, which focused heavily on efficiency and cost control, director of powertrain engineering Colin Campbell took the stage to show how the company plans to cost its cars’ powertrains to reduce, while maintaining fast and energy efficient performance. .
Campbell revealed, “In our next powertrain, the silicon carbide transistors I mentioned, which are a key component[s] but expensive, we figured out a way to use 75% less without affecting the performance or efficiency of the car.”
Sections of ON Semiconductor and ST Microelectronics each was down more than 4%, while The speed of the wolf has fallen more than 9% and MP materials more than 12% in midday trading, as investors worried that Tesla’s moves would be a blow to the auto industry.
Campbell did not say when the company’s next-generation powertrain would be ready for production and high-end use in the company’s vehicles, and he did not specify how much he is spending on those transistors today. Executives at the event did not reveal concrete details about the “next generation” Tesla, which some analysts are referring to as the Model 2.
Chips made of silicon carbide transistors are widely used in electric vehicles. In general, they withstand more heat, have a longer life and are more energy efficient than semiconductors made from silicon power transistors, according to IEEE.
Bank of America analysts called Tesla’s claims “unique but premature.”
They admitted, “If true, this technological breakthrough could pose a significant threat to the industry of SiC materials (WOLF, COHR, Rohm) and devices (ON and European peers STMicro, Infineon – covered by Didier Scemama ).” They added the possibility that “cheaper [silicon carbide chips] EV adoption could increase globally so that what retailers lose on content could be partially offset by increased EV volumes.”
New Street Research analysts generally agreed, and wrote in a note Thursday, that the news from Tesla is actually a good thing for chip makers as they expect demand to remain high across the board. outside the EV industry.
They wrote about Tesla’s announcement: “The new drive train converter will use a hybrid architecture,” which combines silicon and silicon carbide transistors, with both types of transistors working together to maximize loads in Tesla’s vehicle. handling, especially during acceleration of the vehicle. “This hybrid architecture is for the new platform only, ie a low-cost, small, lower-performance car, and will not be adopted for models that already exists (S, X, 3, Y), or the Cybertruck.”
New Street doesn’t expect Tesla’s lower-priced next-generation vehicle to “ramp in volume by 2025 or 2026.”
Wells Fargo analysts maintain an overweight rating on shares of both Wolfspeed and OnSemi with a price target for Wolfspeed of $110 and a price target 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 due to strong demand from automakers in general. All growing EV makers will try to scale up while controlling costs but in the short term, they will be more concerned about getting a supply of silicon carbide chips for the models they have new electric vehicles, many of which are to be launched this year and next year. .
—Michael Bloom contributed to this report.