How does SiC “save” price-cutting car companies?

Entering 2024, more than 10 car companies have announced price cuts. Car companies put greater pressure on suppliers to reduce prices, generally requiring a 20% price reduction. In the past, they generally reduced prices by 3% to 5% per year. Some people believe that the price cuts in the auto market are due to cost reductions brought about by new technologies. However, from a broader perspective, the decline in sales in February may be a last resort for more companies to join the price war. But from another perspective, cost reduction will indeed alleviate the pressure of price reduction. Will SiC (silicon carbide) be the way out?

01. The beginning and end of the price reduction storm

February 19th can be said to be the beginning of everything. The wave of price cuts was started by BYD . From February 19 to March 6, in the 17 days after the Spring Festival holiday, BYD intensively launched the Honor Edition of 13 main models. In the name of new cars, the price is actually reduced. On February 9, BYD announced that its two plug-in hybrid models, Qin PLUS Honor Edition and Destroyer 05 Honor Edition, were launched with a starting price of 79,800 yuan. Compared with the previous version of the Champion Edition model, the prices of the two new versions are the same. It dropped by 20,000 yuan. Among them, the price range of Qin PLUS DM-i Honor Edition is 79,800 yuan to 125,800 yuan; the price range of Qin PLUS EV Honor Edition is 109,800 yuan to 139,800 yuan.

On the same day, Wuling Xingguang announced a price reduction. The advanced version of Wuling Starlight 150km plug-in hybrid sedan dropped to 99,800 yuan, which was 6,000 yuan lower than the original price of 105,800 yuan. It was basically the same price as the BYD Destroyer 05 120km version. On the afternoon of the 19th, according to official news from Nezha Automobile, it has implemented a price reduction strategy for many of its main models. Among them, the price of the entire Nezha X series has been reduced by 22,000 yuan, the price of the entire Nezha AYA series has been reduced by 8,000 yuan, and the price of the entire Nezha S series has been reduced by 5,000 yuan.

In addition, Nezha Automobile has also launched a value-preserving and redemption policy. From now until March 31, 2024, consumers who purchase Nezha S and Nezha GT models will enjoy a 30% discount on the opening price within 2 years of purchase. Nezha Auto offers all new car rights.

Also on February 19, Changan Qiyuan joined the price war and announced that the starting price of the A05 starts at 78,900 yuan. Compared with the original guide price of 89,900 yuan, the price reduction range reached 11,000 yuan, and it also stated that "electricity is lower than oil" slogan. The main reason for the limited-time promotion of Changan Qiyuan A05 is to provide users with more favorable prices and benefit users, allowing users to enjoy the value of new energy products at a price lower than that of gasoline vehicles. On February 20, Changan’s second-generation X5 PLUS and X7 PLUS were officially launched.

Changan has launched a limited-time preferential policy for new cars. From February 19 to February 29, you can enjoy cash discounts of up to 18,000 yuan and 15,000 yuan. The starting prices of X5 PLUS and X7 PLUS after discounts are 73,900 yuan and 83,900 yuan respectively. Yuanqi.

Since March, GAC Group’s two major brands, Aion and Trumpchi, have successively announced new models and price cuts. On March 6, GAC Trumpchi announced significant price cuts for both its M6 Pro and GS3 models. The price of the former has dropped by 20,000 yuan, and the current price starts from 99,800 yuan, bringing the price to the 100,000 yuan mark. The price of the latter was reduced by 16,000 yuan, and the price was as low as less than 70,000 yuan, a price reduction of nearly 20%.

Car companies hope to clear inventory and speed up product replacement through price cuts. Some models with high inventories can quickly collect funds through price reduction sales, providing more financial support for the research and development and production of new products.

02. Can price reduction really lead to “blood transfusion”?

In the short term, price cuts will boost sales to a certain extent. High-quality products require high-quality guarantees, rather than just relying on low prices to attract consumers. It will become increasingly difficult for bad money to drive out good money in the automobile market.

In the long term, the competitiveness of state-owned enterprises is gradually increasing. Product innovation, technological updates, sales layout, influence development, etc. are all challenged by private enterprises and new forces in car manufacturing.

Fuel vehicles and new energy vehicles compete with each other, and most consumers choose one or the other. It is inevitable for manufacturers to cut prices and compete. The promotion of fuel vehicles solves the problem of inventory and working capital in the short term, but in the long term it affects the brand and after-sales service. , and new energy prices and customers will obviously suffer under this wave of suppression. The strategic impact of long-term losses is crucial. The first is to survive, and more importantly, to survive longer. Price reductions obviously cannot solve the fundamental problem.

In this case, SiC attracts more attention.

03. Why does SiC bring hope?

As an important incremental device for vehicle electrification, power devices have benefited from the rapid growth of the downstream market in recent years. Among them, IGBT and SiC are the representatives of the second and third generation power devices respectively, and the battle between the two has never stopped. Compared with IGBT, SiC has obvious advantages in wide bandgap, breakdown electric field, thermal conductivity and operating temperature. Replacing IGBT seems to be becoming a new trend. Some powerful OEMs have deployed IGBT and SiC models at the same time.

Industry insiders said that SiC now takes up most of the share of automotive IGBT modules , and the market growth is huge.

SiC is one of the representatives of the third generation of semiconductors . It has obvious advantages over Si-based materials in four key indicators such as wide bandgap, breakdown electric field, thermal conductivity and operating temperature. Infineon believes that the bandgap of SiC is higher than that of Si 3 times larger, which can be converted into 10 times the breakdown electric field; the thermal conductivity is also 3 times that of Si, supporting high temperature operation of 200°C, while Si is 150°C. SiC is more suitable for working in harsh environments such as vehicles. Therefore, SiC It is considered an excellent alternative material to Si in power devices.

Compared with IGBT, the volume of SiC devices can be reduced to more than 1/3 of IGBT, the weight can be reduced by more than 40%, and the power consumption of SiC can be reduced by more than 60% under different working conditions.

Industry insiders believe that replacing IGBT with SiC can increase inverter efficiency by 3-8%. In the future, SiC will replace IGBT. This is a development trend.

At present, many car companies have achieved optimization of SiC main drive costs. For example, Nissan's new generation SiC electric drive system cost has been reduced by 30%, Tesla 's main drive SiC has been reduced by 75%, and Xpeng's new electric drive has reduced carbonization Silicon costs reduced by 50% and so on. Upstream substrates, chip production capacity and yield rates are constantly improving, and SiC modules have certain room for price reduction.

The global SiC development from 6 inches to 8 inches is expected to drive down the unit price of chips. Just as silicon wafers are developing from 8 inches to 12 inches, SiC wafers are currently developing from 6 inches to 8 inches. Larger wafer size can increase the number of single chips, increase productivity, and reduce the proportion of edge chips, thereby improving wafer utilization. For example, according to Wolfspeed statistics, edge chips account for 14% of 6-inch SiC wafers, while the proportion drops to 7% for 8-inch SiC wafers.

As the size of global SiC wafers expands, it is expected to drive down the unit price of SiC chips, thereby opening up the application market. The selling price of SiC substrates has gradually declined as shipments have increased. In 2021, Tianyue Advanced's average sales price was 6,767 yuan/piece, a year-on-year decrease of 25% from 2020. Considering that domestic 6-inch substrates have not yet been mass-produced, it is expected that there will be room for price reduction.

On the other hand, semi-insulating SiC substrates currently sell at a higher price due to fewer market suppliers and some downstream military equipment applications. The current high selling price of SiC substrates is caused by many factors such as low yield level, small wafer size, and low degree of automation.

As manufacturers improve their processes and develop larger-size SiC wafers, it is expected that the selling price of SiC substrates will gradually decline. Because SiC cost reduction relies on increasing size, increasing available thickness and decreasing defect density. As the proportion of large-diameter substrates continues to increase, the growth cost per unit area of ​​the substrate decreases. The available thicknesses of single crystals are constantly increasing. Taking a 100mm diameter single crystal as an example, before 2015, the average available thickness of single crystals prepared by most single crystal manufacturers was around 15mm, and by the end of 2017 it had reached around 20mm.

As the crystal defect density of the substrate decreases, the process complexity increases. After most substrate providers complete the development of low-defect density single crystal growth processes and thick single crystal growth processes, the price per unit area of ​​substrates will usher in a relatively rapid decrease.