THIS MATERIAL IS A MARKETING COMMUNICATION.
Trends in Key Components of Electric Vehicles
As the global automotive market shifts from internal combustion engine (ICE) vehicles to electric vehicles (EVs), vehicle designs have been restructured with multiple new components and applications being added to bring better performance and user experience. This electrification process is creating a great content opportunity and hence new addressable markets for auto parts and components suppliers.
Batteries are key to EVs and account for about 30% of total component costs.1 On top of that, there are electrical architecture, power train system and power electronics which take up about 15% of the costs.2 These new components have replaced the traditional fuel system, engine and exhaust in an ICE car model. Content per value is expected to increase meaningfully from US$22k for an ICE vehicle to US$31k for an EV.3
We expect a dynamic competitive landscape in EV auto parts supply chain in response to these new addressable markets. We have summarized the following industry trends auto parts suppliers are facing: 1) Many EV makers are new to the auto industry with relatively stretched balance sheets. They do not have sticky supply chain relationships and hence are more willing to outsource components; 2) Technology disruption potential is high for new electric components. We see more and more integrated solutions such as 3-in-1 power train or 7-in-1 power train. These new solutions have created room for new entrants to win their presence; 3) The total addressable market is large and the industry is fast growing. This is an attractive market for both new entrants and existing auto parts companies; 4) Though EV penetration is still at an early stage, customers and car makers are expecting higher standards and better performance, such as higher ranges, faster charging, autonomous driving capability etc., which means auto parts suppliers have to consistently invest and improve product performance.
To cater to the electrification trend, many global major auto parts companies are shifting their focus to electric components and are preparing new product lines such as electrified powertrain. Many of them are optimistic about their increased addressable content value. For instance, Magna estimates its addressable content per vehicle (CPV) to grow from $900 to $1,100; BorgWarner forecasts its CPV to grow from $907 to $2,640; Valeo estimates 6X CPV by 2025. 4 We see some of them leveraging on their existing strong relationships with car makers and entering into strategic alliances on EV product designs. New entrants or lower tier auto parts suppliers, such as Nidec, Inovance and Shuanghuan, are also trying to gain a bigger market share in the EV supply chain.
In addition to the new power train system, EV makers are making innovations regarding smart cockpit designs and autonomous driving capability. They are transforming cabins to those with always-connected digital cockpits, which will enable better multimedia experience, smartphone-like operating system and smart navigation.
Staying Ahead with Mirae Asset’s Latest Insights
1. Bank of America, June, 2021
4. Company presentations, 2021
Disclaimer & Information for Investors
No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only. It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.
The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements. Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.
Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.
Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.
Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.
The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature/ . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.
A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary/.
The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.
Hong Kong: This document is intended for Hong Kong investors. Before making any investment decision to invest in the Fund, Investors should read the Fund’s Prospectus and the information for Hong Kong investors (of applicable) of the Fund for details and the risk factors. The individual and Mirae Asset Global Investments (Hong Kong) Limited may hold the individual securities mentioned. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Copyright 2021. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.