The automotive market is undergoing rapid change. Based on a forecast by the McKinsey Center for Future Mobility, battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) will make up more than 55 percent of new vehicle production by 2030 across China, Europe, and North America. This represents 47 million units globally—seven times more than in 2021.
Adoption has moved beyond start-ups, with all mainstream OEMs now focused on electric vehicles (EVs) and with forecasts for EV penetration continuing to accelerate: more than 500 EV programs will come to market from 2024 to 2026 alone. In short, tomorrow’s vehicle archi-tecture is being defined today, offering a narrow window of opportunity for chemical companies to set the standard for materials applications in the years to come.
Although EVs have been a hot topic in the chemicals industry for some time, a major paradigm shift in automotive procurement practices has made the space dramatically more attractive for chemical players, not considering cell chemistry, a market governed by unique value chain dynamics. Whereas chemicals in the automotive industry were traditionally considered on a unit-cost basis—with suppliers barely able to hold value over the program life cycle—savvy automotive OEMs and tier suppliers are now moving to a system value approach. These players recognize that materials solutions can provide outsize value in reducing cost and improving the reliability of expensive parts such as batteries, power electronics, and electric motors.
To illustrate this point, consider the powertrain of a typical BEV. The battery, inverter, and electric motor together cost more than $10,000—often three to four times the cost of their equivalent parts in a conventional combustion engine vehicle. Hence, the vehicle system must come down in cost for BEVs to gain widespread adoption.
In this context, leading OEMs have discovered that using the right thermal and insulation materials in the powertrain can lead to significant increases in system efficiency and reductions in warranty cost, which together can be worth several hundred dollars per vehicle. These savings make it much easier for OEMs to invest in enabling these materials.
For example, a transition from silicon oxide (Si) to silicon carbide (SiC) power modules in the inverter can generate system savings on the order of $200 per vehicle for OEMs. This is because of the semiconductor’s greater power efficiency (reducing battery cost) and more optimal cooling profile (reducing thermal management cost), despite SiC costing more than Si counterparts. Consequently, innovations in materials that enable system cost reductions can provide tremendous value to OEMs.
