In July this year, the number of Tesla Model 3 vehicles insured reached 11,000, with monthly sales exceeding 10,000 consecutively; BYD's new energy vehicle insurance reached 9,000, a month-on-month increase of 9.0%. According to data from the China Association of Automobile Manufacturers (CAAM), domestic new energy vehicle production and sales in July reached 100,000 and 98,000 respectively, year-on-year increases of 15.6% and 19.3%. The positive growth in new energy vehicle sales in July marked the end of 12 consecutive months of negative growth since July last year.

Driven by major new energy vehicle promoting countries such as China, the United States, Germany, and Japan, the global new energy vehicle market has entered a period of rapid growth. As the core of electronic device power conversion and circuit control, power semiconductors are the segment with the largest value increase in the transition from traditional fuel vehicles to new energy vehicles. At the same time, the domestic power semiconductor market has a huge demand, but high-value-added products have long been monopolized by European and American manufacturers, and domestic substitution is imminent. Under the dual benefits of market demand and policy guidance, power semiconductors are expected to become the best breakthrough for "China's core".

Accelerated Electrification: Fastest Value Growth in Power Semiconductors

Data shows that global sales of new energy passenger vehicles reached 2.21 million units in 2019, with a penetration rate of 2.5%. It is expected that by 2025, global sales of new energy passenger vehicles will exceed 10 million units, reaching 11.5 million units, with a compound annual growth rate of 32% compared to 2019. Based on an incremental cost of US$280 per vehicle for power semiconductors, new energy vehicles will bring an incremental increase of approximately US$3.2 billion to the global power semiconductor market.

Industry analysts point out that new energy vehicles are shifting from policy-driven to supply-side driven, with the launch of numerous popular models on the supply side as the core driving force.

NIO, a leading domestic new car-making company, released its second-quarter financial report on August 11, showing that the company's gross profit margin turned positive for the first time, reaching 9.7% for sales gross profit margin and 8.4% for comprehensive gross profit margin. The operating loss also narrowed significantly year-on-year by 64%. NIO's second-quarter sales data showed that a total of 10,331 vehicles were delivered in the second quarter, achieving over 10,000 deliveries in a single quarter for the first time. Sales growth promoted the realization of economies of scale, and the positive gross profit margin reflects a significant improvement in profitability.

"The development trajectory seen in the IT era and the smartphone era will most likely also occur in the automotive industry; it's just a matter of time." Zhigang Ni, Asia Pacific Director of Safety and Connectivity Business Unit at Aptiv, previously pointed out to Jiemvi.com in a discussion on the future innovation and upgrading of automobiles.

By analogy with the history of smartphone development, the emergence of popular models will push the new energy vehicle industry from the introduction stage to the growth stage. Changcheng Securities analyzed that the global new energy pattern has gradually formed, and the prosperity of domestic new energy vehicles is also gradually recovering. At the same time, with the entry of global industry leaders such as Tesla into China, with its highly competitive product power and brand power, it further activates the market. Tesla's localization in China will bring significant development opportunities to domestic industry chain companies.

In the transition from traditional automobiles to new energy vehicles, the segment with the largest value increase is power semiconductors.

Power semiconductors are the core of electronic device power conversion and circuit control. As a closed system, the internal power output of a vehicle needs to be converted through discrete devices and power MOSFET devices, which is particularly important in hybrid and new energy vehicles. According to statistics from Strategy Analytics and Infineon, the amount of power semiconductors used in traditional fuel vehicles is about 21, with a cost of around US$71; the cost of power semiconductors in mild hybrid electric vehicles (MHEV) is about US$90; in full hybrid electric vehicles (FHEV)/plug-in hybrid electric vehicles (PHEV), the cost of power semiconductors rises to US$305; and the cost of power semiconductors in battery electric vehicles (BEV) can reach US$350, which is about 5 times the cost of power semiconductors in traditional fuel vehicles.