The year 2022 saw lockdowns in China due to the pandemic, the resulting impact on car sales, and the shortage of auto components. The Russia-Ukraine war also affected the global supply chain of the automobile industry. Despite the gradual transition to living with COVID-19 worldwide, ITRI (the Industrial Technology Research Institute) forecasts the global automobile sales volume to be 79 million units in 2022, down 3.7% for the year. The global auto market is expected to not return to the pre-pandemic levels until 2025.
Regarding regional markets, China remained the largest market in terms of sales volume, followed by the U.S. The Indian market saw a gradual recovery starting in July due to easing the auto chips shortage. It continued to buck the global trend by growing over 20% for the year, replacing Japan as the world’s third-largest market. Due to the continued shortage of chips and the COVID-19 disruption to component supply, Japanese OEM sales were stagnant. The Japanese market was expected to drop by 3.3% in 2022.
In contrast to the overall auto market, the global electric vehicle market continues to grow amid the trend for net zero
The international trend for net zero is driving the sales of electric vehicles worldwide, and many carmakers have set up corresponding targets. According to the forecast by ITRI (the Industrial Technology Research Institute), overall electric vehicle shipment is expected to increase by over 30% and exceed 15 million units in 2022, despite the supply disruption of automotive chips. Battery electric vehicles (BEV) accounted for 52.1% of the total EV market in 2022, surpassing hybrid electric vehicles (HEV) (32.6%) for the first time. China, the U.S. and Japan are the world's top three passenger EV markets. In 2022, the U.S. replaced Japan to become the second largest market. Latecomers to the EV race have gradually taken market share from Toyota, the largest brand. BYD became the second-largest brand due to sales in the Chinese market. Tesla trails closely behind. Given the global push for carbon emissions reduction, zero-carbon BEVs will continue to see more models launched and higher sales.
The Taiwan market in 2022 continued to be affected by the shortage of auto chips. The Russia-Ukraine war disrupted the supply of auto harnesses, and the Shanghai lockdown interrupted the shipment of certain parts from China. Some purchases were made in 2021 due to expectations of the discontinuation of specific car models or fears of future increases in selling prices. The rising infections of COVID-19 in the second quarter impacted the output of carmakers. Although production ramped up in response to the subsidy support (via a tax on goods) for old car replacements, stable exports and a smooth supply of components starting in the third quarter, the overall annual production dropped by 2.6% from 2021, down to around 440,000 units. Meanwhile, the market share of domestically-produced cars rebounded to 55.9%.
In terms of EV market development, EV sales in Taiwan are expected to reach 80,000 units in 2022. Currently, the EV value chain in Taiwan extends from materials at the upstream end to services at the downstream end. Numerous manufacturers have entered the supply chain of international EV brands. Strategic alliances among companies cover a variety of products and technical competencies. The successful development of the MIH Open EV Alliance and the TADA (Taiwan Advanced Automobile Technology Development Association) alliance and the launch of multiple domestically-designed EV models are all positives for the Taiwan EV industry.
Taiwan’s auto industry should have a five-pillar strategy
Given the continued growth in global EV sales, the stringent requirement for fuel consumption of new vehicles to be an average of 20.9km per liter in Taiwan in 2022, and the rising popularity of domestically-produced smart cars, the future of Taiwan’s automobile industry should be anchored on a five-pillar strategy: namely, strengthening of competence in batteries, motors and electronic control; support of start-up OEMs; preparation for future scenarios; model designs with specific features; and deployment of the testing and verification environment. Preparing for future scenarios entails the establishment of industry alliances for smart cockpits and carbon capture, vehicle-to-grid (V2G) technology and battery material recycling capabilities. All these measures will help enhancement of Taiwan’s competitiveness. The industry may explore ways of integrating with the domestic IT and communications industry and the advantages they offer to the EV supply chain to design price-competitive domestic EVs with new hi-tech features and develop the export markets for EVs and components.
The production value of Taiwan’s automotive electronics industry is growing steadily, breaking through NT$300 billion for the first time in 2022
Given the continued drive for vehicle electrification, the Taiwan automotive electronics industry is going stable growth in production value. As digitalization and environmental sustainability issues continue to progress, the prevalence of automotive electronics is on the rise. ITRI (Industrial Technology Research Institute) forecasts the global automotive electronics market will reach US$294.9 billion in 2022 and over US$400 billion in 2027. It is expected that automotive electronics will account for more than 50% of a car’s cost by 2030, and the value of automotive electronic systems will continue to increase.
The increasing use of automotive electronics underpins the demand for automotive semiconductors. The global automotive semiconductor market is projected to grow from US$41 billion in 2019 to US$140 billion by 2030. The demand for vehicle electrification, autonomous driving and connected cars will account for nearly 90% of total sales.
Meanwhile, L3 autonomous driving cars have hit the road and L4 autonomous driving services are being launched, which will help with the implementation of technology in the industry. The connected car services market also continues to grow. The CAGR (compound annual growth rate) of the global connected car services market is expected to be 19% in 2021-2026. Connected services will monetize the value of data.
The production value of Taiwan’s automotive electronics industry is expected to reach NT$300 billion in 2022. The suppliers of components at the upstream end continue to target the automotive market, while suppliers at the mid-to-downstream side seek to enhance software and system integration capabilities and develop modularized solutions. Going forward, Taiwan can combine industry momentum in the fields of electrification/electronic components and modules, ADAS (advanced driver-assistance systems), telematics and infotainment systems and smart cockpits. Efforts towards vertical integration will be essential to drive growth for the next stage of development in the industry. achieved through the actions of everyone.