Global State of EV Manufacturing & Supply Chain: China & Taiwan

20.12.2023

China, EV, supply chain, Taiwan

By Dave Chu

China’s EV Manufacturing Supply Chain

Upstream Stage:
China is a leader in the supply of raw materials and components for EV manufacturing. This includes the extraction of minerals like lithium and cobalt and the manufacturing of major parts such as power batteries, drive motors, and electronic control systems. China accounts for 75% of global lithium-ion battery production and 70% of cathode capacity.
Midstream Stage:
The vehicle manufacturing process in China is robust, supported by government policies and investments. China’s manufacturing ecosystem is well-established for electric cars, commercial vehicles, and special-purpose vehicles.
Downstream Stage:
Involves charging services and after-market services. Despite having a significant number of EV charging piles, there is still a gap between current numbers and market demand, indicating potential growth in charging infrastructure.
Supply Chain Integration:
The EV supply chain in China is seeing integration of specialized components like batteries and system software, transforming the industry into a technology-intensive sector. The supply chain system is becoming flatter and more flexible to adapt to market changes.

Upstream Stage: Raw Materials and Component Supply

Lithium-Ion Battery Production:
China dominates the global lithium-ion battery production, accounting for 75% of the worldwide output.
Refining of Battery Metals:
It is the leading refiner of battery metals globally, playing a critical role in the supply of raw materials essential for EV manufacturing.
Major Part Manufacturing:
This includes the production of power batteries, drive motors, and electronic control systems. China’s role in this segment is substantial, reflecting its global prominence in these areas.

Midstream Stage: Vehicle Manufacturing

Robust Manufacturing Ecosystem:
China has established a comprehensive manufacturing ecosystem for various types of electric vehicles, including cars, commercial vehicles, and special-purpose vehicles.
Government Support and Investment:
The Chinese government has implemented supportive policies and made substantial investments to promote the growth of the EV manufacturing industry.
Concentration in Key Areas:
The distribution of the EV industry in China mirrors that of the traditional automobile sector, with a concentration in regions like Beijing-Tianjin-Hebei, the Yangtze River Delta, the Pearl River Delta, and the central region.

Downstream Stage: Charging Services and After-Market Services

Charging Infrastructure:
Despite a significant number of EV charging piles, there is still a considerable gap between current availability and market demand.
Growth Potential:
This gap indicates a substantial opportunity for growth and development in China’s EV charging infrastructure.

Supply Chain Dynamics and Trends

Supply Chain Integration:
The EV supply chain in China is experiencing integration with specialized components, such as batteries, system software, and power semiconductors.
Technology-Intensive Industry:
This shift is transforming the automotive industry into a more technology-intensive sector.
Flexible Supply Chain System:
The supply chain is evolving to be flatter and more flexible, adapting quickly to market changes. This allows Tier-2 and Tier-3 suppliers to directly supply new car manufacturers, bypassing traditional Tier-1 companies.

Future Prospects and Developments

Overseas Investment:
China’s EV supply chain is increasingly looking outward with overseas investments and collaborations.
Partnership Trends:
Major automakers are partnering with Chinese battery manufacturers for tailored battery solutions, indicating a growing trend in this area.

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In summary, China’s EV manufacturing supply chain is characterized by its dominant role in lithium-ion battery production, comprehensive vehicle manufacturing ecosystem, and evolving charging infrastructure. The industry is transitioning towards a technology-intensive sector, driven by innovations and supported by government policies and investments. The integration of specialized components and the flexibility of the supply chain are key trends shaping the future of China’s EV industry. The potential for growth in charging infrastructure and international partnerships also marks the dynamic nature of this market.

Taiwan’s EV Manufacturing Supply Chain

Regional Supply Chain Trends

Policy Support:
Strong policy actions in Asia are supporting the EV market’s development. Countries like China, Japan, and South Korea have comprehensive policy frameworks, whereas emerging markets like Thailand are setting ambitious targets.
Technological Integration:
There is a trend towards integrating more specialized components in the EV supply chain, reflecting a shift from traditional manufacturing to a more technology-intensive industry.
Challenges:
Key challenges across the region include achieving cost parity, ensuring supply chain readiness, and developing sufficient charging infrastructure.

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Taiwan’s role in the electric vehicle (EV) manufacturing supply chain is evolving and expanding, with a particular focus on chip manufacturing and technology integration. Taiwan’s tech companies, particularly Foxconn, are increasingly targeting the EV market. Foxconn, known for its significant presence in ICT manufacturing, has been making strides in the EV sector through ventures like Foxtron, a joint effort with Taiwanese car maker Yulon Motor Co Ltd. This initiative has seen notable success, with Foxtron’s EVs, such as the Luxgen n7, receiving significant pre-orders and Foxconn announcing prototypes of various EV models including SUVs, sedans, and buses. Foxconn’s global presence and supply chain resilience have been key factors in its push into the EV market.

Additionally, Taiwan’s chipmakers are seeing their role in the global EV supply chain grow. The semiconductor industry, a stronghold of Taiwan’s tech sector, is becoming increasingly integral to the EV market. This is due to the critical role of chips in modern EVs, which require sophisticated electronic components for various functionalities. Taiwanese companies are capitalizing on this demand, leveraging their established expertise in semiconductor manufacturing to play a pivotal role in the EV supply chain.

The trend in Taiwan’s EV supply chain indicates a shift towards more technology-focused manufacturing, with an emphasis on high-tech components such as chips and electronics. This aligns with the global trend in EV manufacturing, which is increasingly integrating advanced technologies into vehicles. Taiwan’s established expertise in technology manufacturing, particularly in semiconductors, positions it well to be a key player in the evolving EV supply chain.

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