Electronics and Semiconductors

COVID-19 to likely impact sales of Tesla electric vehicles this year

15 April 2020

There are several problems working against Tesla Motors in 2020, the biggest of which being the outbreak of the coronavirus pandemic and the subsequent global recession caused by the virus.

In the wake of the outbreak of COVID-19, Tesla shut down its Shanghai, China, plant for about two weeks and its automotive manufacturing plant in Fremont, California, remains shut down. Additionally, because much of the world’s population is in lockdown, sales of all vehicles including electric vehicles (EV) are slowing rapidly.

However, according to Omdia, formerly IHS Markit, because Tesla is well-positioned in the market, a solid rebound for the car maker is expected in 2021 after the world emerges from the coronavirus pandemic. However, a likely lower output target is expected this year.

Surge in chip spending

Despite these current problems, Omdia said Tesla has scaled up vehicle production by more than threefold in just three years. This uptick in production has led to a significant amount of electronics deployed in EVs, pushing semiconductor spending by the company to new heights.

Tesla dominated sales of EVs in the U.S., accounting for nearly 60% of all EV sales in 2019 and the company produced 367,000 EVs last year, tripling its output from 2017, Omdia said.

As a result of this increased production of vehicles, semiconductor spending grew to $714 million in 2019 up from just $88 million in 2015, representing a four year compound annual growth rate (CAGR) of 69%.

Despite the slowdown due to COVID-19, Tesla’s chip spending is expected to increase 27% to $903 million in 2020 and then rise another 25% in 2021 to cross the $1 billion mark, Omdia forecasts.

Tesla’s chip spending went primarily into automotive chips at 97% with the remaining 3% going to industrial products such as vehicle-charging stations, energy storage and solar systems.

For more information about Omdia’s research, see the company’s OEM Semiconductor Spend Tracker.

To contact the author of this article, email PBrown@globalspec.com

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