What makes Asia Pacific the world’s largest market of electric motors in automotive applications?
Worldwide revenues for electric motors in automotive applications are expected to increase to over $30 billion in 2019, up from $25 billion in 2014.
The world automotive industry is undergoing a fundamental transformation in order to fulfill the demand for better fuel economy and reduced environmental contaminants. The world’s governments have responded to these market forces by imposing various legislation on automotive original equipment manufacturers (OEMs) for improved fuel economy and emission control. The most noteworthy technology change within the automotive industry is the emergence of lightweight design projects in vehicle steel-Future Steel Vehicle (FSV), Hybrid Electric Vehicle (HEV) and other green technologies.
Asia Pacific is projected to lead global growth through 2019, driven by automotive production and sales in the region with an increase in revenue of 15.4%, though different countries will have different drivers.
Environmental awareness in China and economic transformation in India
Energy and fuel efficiency continue to be the drivers for growth. The OEMs and Tier1 are phasing out efforts to meet the stringent emission requirements mainly in the Eurozone, China and America. Automotive component electrification and downsizing are among the most effective approaches to achieving the fuel-efficiency standard in a vehicle; hence, the electric motor will play a big part in this. India and China are forecast to be the two fastest-growing markets in Asia Pacific for electric motors in automotive applications, with CAGRs of 8.7% and 7.8% through 2019, respectively. In 2014, the average number of electric motors fitted into a vehicle in China and India was 28, or four fewer than the global average of 32, reflecting a substantial unfilled market opportunity for market leaders to tap into.
In terms of unit shipment and revenue, China remained the largest market for electric motors used in automotive applications in 2014. Despite the growing demand of the middle class and SUV vehicles, the increasing emissions standards in the region could limit regional carmakers’ sales potential in China. Meanwhile, India is rapidly emerging as a global sourcing hub for automakers across the globe. The growth of the Indian electric motors market for automotive applications will eventually outpace China due to the growing local economy, which is partly driven by the national economic transformation program called "Make in India". India is ranked as the world’s sixth-largest automotive market and world-class automakers like Mercedes-Benz, Ford and Volkswagen are rolling out expansion plans in India to maximize manufacturing capacity and output to minimize the supply-demand gap in the local market. With these plans, the Indian market for electric motors in automotive application is poised for strong growth through 2019.
Southeast Asia: Thailand, the future EV manufacturing hub for European exports
The Southeast Asia region will be the third-fastest growing market after India and China through 2019. In 2015, Southeast Asia (SEA) is forecast to account for 4.5% of the world’s light vehicle production and 8.8% of the Asia-Pacific region’s production. By 2019, SEA’s automotive manufacturing is forecast to grow exponentially and achieve 10.6% and 20.1% of the world and Asia-Pacific markets, respectively. Despite a slow automotive market recovery after 2011, Thailand remained the biggest hub in the SEA region, accounting for 48% of total production volume and continues to attract foreign automotive investors and partnerships. First One Mile Mobility (FOMM), a Japanese electric vehicle development company, is now seeking a Thai partner for joint investment in setting up a production plant. This will be beneficial to the Thai automotive industry and could potentially transform the country into an electric vehicle manufacturing hub. SEA’s typical vehicle has about 27 motors, which is relatively lower than the market average, indicating a promising growth opportunity for the electric motor market in SEA.
Technology innovation: The drivers of the market
DC brushed motors are still favorable in the market. However, DC brushless motors are continuing to replace DC brushed motors in applications where both types of motor are being fitted. This trend is primarily observed in powertrain applications and airflow applications. For example, in the powertrain segment the Electric Power Steering (EPS) has replaced hydraulic power steering in many new vehicles. The transition of DC brushed to DC brushless motors is substantial due to its inherent advantage of fuel economy improvement and substantial elimination of the weight and bulk of the DC brushed motor. IHS expects growth at a CAGR of 7.6% for DC brushless through 2019, driven by the benefits of its technological edge in the automotive industry. DC brushed technology will be retained in other automotive components like power seating, power doors, and power locks, which are generally inexpensive and reliable. By 2019, more than 20% of electric motor revenue in China will come from DC brushless motors driven by the implementation of government regulations. Despite the positive motor type transition trend happening in Asia Pacific, the DC brushless motor market in India and Southeast Asia will remain lower than 20% as the majority of the automotive components manufactured in India and Southeast Asia are still DC brushed fitted components. In 2019, IHS expects the DC brushless markets in India and Southeast Asia to generate $189.7 million and $202.6 million in revenue, respectively.
The competitive environment
The supply-demand balance and pricing stability of rare earth materials have instilled confidence in motor manufacturers after China lost its appeal on the World Trade Organization’s (WTO) ruling on rare earth exports. The market leaders of electric motors in the automotive industry will continue to work with rare earth suppliers to perform research on lighter and smaller motors to improve efficiency. Meanwhile, price competitiveness is the biggest challenge in the industry. The ASP of electric motor is forecast to decline in an attempt to boost motor shipments to the automotive industry. There are several companies expanding and diversifying their product lines to cater for both the DC brushed motor and DC brushless motor markets’ demand. Despite the decline of ASP, the overall competitive environment will remain unchanged as the existing market players have established a good partnership with OEMs and Tier1 in the automotive industry.
– Joanne Goh is a research analyst in the industrial automation group at IHS Technology. IHS is a CFE Media content partner.