Automotive Silicon Carbide Market Set for Explosive Growth in 2025

In 2016, the Tesla Model 3 became the world's first pure electric vehicle to use a fully silicon carbide (SiC) power module in its main drive inverter, pioneering the application of silicon carbide. Prior to the Model 3, most electric vehicles on the market utilized silicon-based IGBT solutions due to the advantages of IGBTs. The Model 3's use of silicon carbide to replace silicon-based modules marked a milestone innovation that significantly accelerated the promotion and application of wide bandgap semiconductors like silicon carbide in the automotive sector.

When discussing the advantages of silicon carbide power devices, they primarily manifest in vehicle power control and charging units. In the power control unit, the lightweight nature of silicon carbide is a significant benefit. Its higher thermal conductivity allows for smaller and more cost-effective heat sinks. For the same power rating, silicon carbide power modules are also smaller than silicon-based modules. In charging units, silicon carbide can enhance driving range. Operating at high voltage, high frequency, and high temperature reduces the battery capacity required for the same driving range. Experimental calculations indicate that silicon carbide can improve the overall vehicle range by 5% to 10%.

The largest consumer of automotive silicon carbide is the Model 3, which uses the ST GK026 (650V/100A) silicon carbide power device in its main drive inverter. The area of a single die is 4.8mm × 4.8mm, meaning that a single 6-inch silicon carbide wafer can produce up to 600 gross dies. Assuming a typical silicon carbide chip yield (wafer yield × die yield × packaging yield) is around 50%, the number of good dies would be approximately 300.

Die per wafer = (Wafer area / Die area – Wafer perimeter / Die diagonal)

If an electric vehicle uses silicon carbide devices in key components such as the main drive inverter, on-board charger (OBC), chargers, and fast charging stations, it is entirely possible for a single vehicle to require 100 to 150 silicon carbide dies. This implies that, on average, every 2 to 3 Tesla electric vehicles would consume at least one 6-inch silicon carbide wafer. Based on the sale of over 1.7 million Model Y/3 vehicles in 2023, this American electric vehicle giant would need 600,000 to 800,000 silicon carbide wafers annually.

As mentioned earlier, Tesla was the first to launch a silicon carbide solution for its main drive inverter. Due to the long-term reliability and stability being unknown, setting high rated values for the inverter effectively mitigated risks. Now that reliability and stability have been sufficiently validated, it is understandable that Tesla would make appropriate adjustments in its next-generation models.

Compared to competitors, Tesla’s inverters clearly have higher specifications. Although Tesla’s high-performance models feature a Ludicrous mode, this comes at the cost of additional silicon carbide devices, and only a small number of customers actually use this feature. If Tesla were to launch a new low-cost model, there would be no need to maintain the same power levels. Furthermore, silicon carbide device manufacturers are currently striving to develop new technologies to enhance current capacity while reducing chip size, making next-generation product updates a natural progression.

Tesla's future shift to an 800V architecture will theoretically require fewer silicon carbide chips compared to a 400V architecture. Currently, the Model 3 uses 650V SiC MOSFETs, and if it upgrades to 1200V SiC MOSFETs, the chip count could theoretically be halved, from 48 to 24.

Cost Reduction and Efficiency Improvements Draw Attention

In the 2023 electric vehicle sales rankings, the Tesla Model Y again led the market, with sales exceeding 1.2 million units, a substantial year-on-year increase of 57%. This made it not only the best-selling electric vehicle but also the best-selling model in the mainstream automotive market. The second and third positions remained the same as in 2022, with BYD Song and Tesla Model 3 recording sales of 636,000 and 529,000 units respectively, reflecting growths of 33% and 11% compared to 2022.

The Model 3 saw a decline in sales due to its redesign. In fact, the Model 3's market share has steadily decreased, from 14% in 2019 to just 3.9% in 2023, with its sales stagnating. The previous year’s sales of 529,000 units represented its peak. It seems that for certain models, there may indeed be a market growth bottleneck.

In March 2023, Tesla announced at an investor conference its goal for the next generation of models to achieve a "50% cost reduction and a 75% reduction in silicon carbide usage," which caused fluctuations in the stock market. Components that significantly contribute to manufacturing costs will inevitably be among the first to be targeted for cuts. Given that the cost of silicon carbide has remained high due to material preparation factors, it has naturally become a focal point for cost reduction and efficiency improvement.

The supply chain for silicon carbide, particularly among upstream suppliers, often falls short of capacity and yield expectations, directly impacting the production schedules of new vehicles, placing ongoing pressure on Tesla’s procurement. This has led Tesla to reconsider new strategies for silicon carbide supply, especially in the uncertain external environment caused by the pandemic in recent years. While Musk has mentioned that "power devices are not only core to our cars but also to charging stations and energy storage products," this reflects Tesla's confidence in expanding the application scenarios for silicon carbide in the future. However, the tight global supply of silicon carbide wafers in recent years has constrained Tesla's strategy of widely adopting silicon carbide.

Accelerating Penetration of Silicon Carbide

Statistics indicate that in 2023, the penetration rate of silicon carbide in pure electric vehicles reached 25%, with the Model Y and Model 3 contributing over 65% of this total. Therefore, in the next two years, we will continue to rely on Tesla to drive the demand for silicon carbide in the market. It is estimated that by 2025, the penetration rate of silicon carbide will reach 50%, meaning that over 200,000 vehicles will be equipped with silicon carbide as a standard feature. This is a definitive trend.

Since Xpeng Motors introduced the G6 with an 800V architecture priced at 200,000 yuan in 2023, the 800V architecture has become a standard feature for new pure electric models. Most automakers are currently developing models with an 800V architecture, indicating that a large number of such vehicles will hit the market in the next two years, enhancing penetration rates. When the penetration rate of 800V reaches a tipping point, silicon carbide will truly enter a phase of rapid growth.

The silicon carbide supply chain includes substrates, epitaxy, device design, wafer manufacturing, and module packaging. The combined cost of substrates and epitaxy accounts for 70% of the total. In 2023, domestic substrate manufacturers Tianke Heda and Tianyue Advanced rapidly increased their global market share, and in 2025, they are expected to further narrow the gap with the leading Wolfspeed. Therefore, the effective release of capacity from domestic manufacturers is crucial.

Despite the rapid capacity growth of domestic substrate manufacturers in recent years, significant quality differentiation among products remains, with high-quality products still in short supply. Recently, projects for silicon carbide substrates exceeding 100,000 pieces have nearly disappeared, reflecting widespread concerns that the substrate industry might experience disordered expansion leading to oversupply, similar to the photovoltaic and lithium battery industries.

Although silicon carbide will still be a clearly high-demand sector in the coming years, the core catalyst for the industry is yield. In terms of product performance parameters, domestic silicon carbide substrates have reached parity with overseas products, but the shortfall lies in yield and consistency. As domestic yields improve, overseas manufacturers will gradually be pushed out. It is expected that after 2025, substrate supply will no longer be a bottleneck restricting the shipment of silicon carbide devices.

From 2020 to 2025, the prices of silicon carbide power devices are expected to halve. This cost reduction will primarily result from the localization of substrates and epitaxial wafers, the maturation of mass production processes for devices, and the economies of scale from 8-inch production lines. Some estimates suggest that silicon carbide device costs must fall below 2.5 times that of corresponding silicon-based IGBTs to enter a commercial mass production phase. It is anticipated that 2025 will be the inaugural year for the widespread application of automotive silicon carbide devices, with the market poised for explosive growth.