Automotive Electrification and Intelligentization

Vehicle wire harnesses are the main network of automotive circuits.

They are mainly used to connect components such as the automobile's storage battery, distribution box, actuators, controllers, and sensors, providing electrical energy and signal transmission for the vehicle's electrical and electronic components, and providing basic connections for control circuits to enable all electrical functions. Automobile wire harnesses are regarded as the "central nervous system" of automobiles. Automobile wire harnesses can be classified into high-voltage wire harnesses and low-voltage wire harnesses according to voltage levels.

The voltage of high-voltage wire harnesses is 300V or above, mainly used for driving power transmission in new energy vehicles; the voltage of low-voltage wire harnesses is below 60V, and the general vehicle voltage is 12V, mainly used for transmitting vehicle signals. According to their uses, they can be divided into engine wire harnesses, instrument panel wire harnesses, lighting wire harnesses, air-conditioning wire harnesses, and auxiliary electrical appliance wire harnesses, etc. According to different functions, they can be divided into ordinary wires, twisted pairs, and shielded wires, etc.

Automobile wire harnesses are components that form connection circuits by bundling wire harnesses after crimping contact terminals (connectors) punched from copper materials with electric wires and cables, and then molding insulating materials or adding metal shells, etc. As a labor-intensive industry, the labor cost of automobile wire harnesses accounts for about 12% - 17% of the total production cost, and the proportion of raw materials is 70% - 80%. The upstream raw materials can be roughly divided into three categories: cables, wrapping materials, and connectors (terminals), including wires, terminals, connectors, and sheaths, etc. Among them, 75% - 80% of the weight composition is automobile cables. Therefore, wire harness factories have relatively strict requirements for cable.

procurement, forming a relatively closed supply system.

Currently, the manufacturers of automobile cables mainly include cable manufacturers under wire harness companies and independent companies that specialize in cable production. Japanese wire harness manufacturers such as Yazaki, Sumitomo Electric, and Furukawa, as well as European and American wire harness manufacturers such as Aptiv and Leoni, mostly adopt the "self-production + outsourcing" model in terms of raw material cables; while domestic wire harness manufacturers such as Huguang and Jinting mainly adopt the outsourcing model. The midstream is automobile wire harness suppliers, including foreign manufacturers mainly represented by German Leoni Group and Aptiv Ltd., and domestic manufacturers led by Huguang Co., Ltd. and Shanghai Jinting. Currently, although there are a large number of domestic suppliers, most of them are small in scale.

The downstream is major automobile manufacturers, who have strong bargaining power and the right to speak in the industrial chain, and have strict assessments and long certification cycles for automobile wire harnesses and other automobile parts. Among the raw materials, copper is the most important component of automobile wire harnesses, and its price trend will have a significant impact on the price of automobile wire harnesses. Copper is a bulk commodity with sufficient market supply, but its price is easily affected by factors such as economic cycles, market demand, and exchange rates, resulting in large fluctuations. Since 2020, the domestic spot price of copper has risen in a fluctuating manner. In early 2019, the domestic spot price of copper (1#) was 47,000 yuan/ton. In the first half of 2022, the price jumped to more than 70,000 yuan/ton, and at the end of the year, the price was 66,000 yuan/ton. In 2023, the domestic spot price of copper (1#) has always been maintained above 67,000 yuan/ton. The rise in copper prices has led to an increase in the production cost of automobile wire harnesses. Related Report: "Analysis Report on the Market Development Scale and Investment Opportunities of China's Automobile Wire Harness Industry from 2023 to 2029" released by Zhiyan , and the development trends of automobile electrification and intelligence have activated the incremental market of automobile wire harnesses.

(1) The production and sales volume of automobiles is gradually recovering, and the scale of the automobile wire harness industry is expanding. The end application of automobile wire harnesses is the automobile industry.

The development status of the automobile industry is closely related to the automobile wire harness industry. Automobile wire harness products are customized products. Different vehicle manufacturers and their different vehicle models have different design schemes and quality standards. The weight of wire harnesses in a single vehicle is 50 - 70 kg, which is the third heaviest component after the chassis and the engine. Data from OICA shows that in 2022, the global automobile production volume was 85,020,000 vehicles, with a year-on-year growth rate of 6%; the global automobile sales volume was 81,630,000 vehicles, with a year-on-year slight decrease of 1.37%. Data from MarketsandMarkets shows that in 2021, the global automobile wire harness market scale was 47 billion US dollars, and it is expected that the compound annual growth rate will reach 4.1% by 2026, and the market scale will exceed 57.4 billion US dollars.

The application amount of automobile wire harnesses in chassis systems such as vehicle frames, air brake pumps, and suspension systems has increased. At the end of 2021, the market scale of chassis wire harnesses accounted for more than 25%. Since the 21st century, with China's accession to the WTO, China's economy has risen rapidly, and the per capita disposable income has been continuously increasing, driving the rapid development of the automobile industry. China's automobile production and sales volume have ranked first in the world for many consecutive years. During the period from 2018 to 2020, although China's automobile production and sales volume were affected by multiple adverse factors such as the economic downturn cycle and Sino-US trade, they showed a downward trend. However, in 2021, with the full development of the new energy automobile industry, China's automobile production and sales volume resumed the growth trend. In 2022, the development continued to be good, with the annual production and sales volume reaching 2,702.1 million vehicles and 2,686.4 million vehicles respectively, with year-on-year growth rates of 3.4% and 2.1% respectively. From January to May 2023, under the continuous efforts of automobile manufacturers to reduce prices for promotion and the national policies to promote consumption, China's automobile production and sales volume as a whole achieved a large increase, with the production and sales volume completing 1,068.7 million vehicles and 1,061.7 million vehicles respectively, with year-on-year growth rates of 11.1% each. As the world's largest automobile production and consumption market, China has a huge sales volume of automobile wire harnesses and has become the main driving force for the growth of the global automobile wire harness scale. In recent years, China's automobile production and sales volume has been continuously warming up, pulling the demand for automobile wire harnesses to continue to increase, and the market scale has been continuously expanding.

(2)In 2022, the market scale of China's automobile wire harnesses increased to 850.7 billion yuan, with an increase rate of more than 14%. Under the trend of automobile lightweighting, Chinese automobile wire harness manufacturers are actively using lightweight materials such as aluminum to manufacture automobile wire harnesses.

Benefiting from the rapid development of new energy automobiles and intelligent automobiles, the added value of automobile wire harnesses has been increased, and the profit space has been continuously expanding. Data from the China Automotive Industry Yearbook shows that in 2021, the total profit of China's automobile wire harnesses and components industry was 1.412 billion yuan, with a year-on-year growth rate of 26%. The total profit of the industry further increased in 2022. (2) The rapid development of new energy automobiles has driven the quantity and price of automobile wire harnesses to rise simultaneously. The rapid rise of China's new energy automobiles has brought greater development space for the automobile wire harness industry. The working voltage of traditional fuel vehicle wire harnesses is 12 - 48V, while the working voltage of the power battery of new energy automobiles can reach 400V or even higher, such as 600V and 800V. Through high-voltage wire harnesses, the power of the power battery can be transmitted to electrical equipment. Due to the particularity of its operating environment, the structure of high-voltage wire harnesses is more complex, and it has more excellent performances in terms of sealing, heat resistance, durability, and anti-interference. Compared with traditional passenger vehicles, the value of new energy automobile wire harnesses is higher.

The value of the wire harness of a single low-end traditional fuel passenger vehicle is about 2,500 yuan, the value of the wire harness of a single medium-high-end traditional fuel passenger vehicle is 3,500 - 4,500 yuan, and the value of the wire harness of a single new energy automobile is about 5,000 yuan. High-voltage wire harnesses connect various components on the high-voltage system of automobiles and are a key part of the high-voltage electrical system. Their performance directly affects the safety of new energy automobiles.

The layout of high-voltage wire harnesses in electric vehicles needs to follow the principle of proximity, using as few high-voltage cables as possible to complete the layout of the route. Normally, the layout of high-voltage wire harnesses can be divided into two cases: layered layout and parallel layout. The layered layout divides high-voltage wire harnesses and low-voltage wire harnesses into upper and lower hierarchical relationships to avoid the electromagnetic interference generated by high-voltage wire harnesses when low-voltage wire harnesses supply power to and transmit signals to control units. According to the actual situation of the current magnitude of different vehicle models, the distance between the high-voltage and low-voltage wire harnesses in different layers is generally within 200 - 300 mm. The parallel layout has the same route, but the high-voltage and low-voltage wire harnesses do not cross, which is applicable to hybrid vehicle models. Through parallel layout, the EMC interference of high-voltage wire harnesses on controllers during work can be effectively prevented. Data from the China Automobile Association shows that from 2021 to May 2023, driven by multiple favorable factors such as policies and the market, the Chinese new energy automobile market has continued to grow explosively, with the production and sales volume increasing rapidly.

(3)In 2022, the production and sales volume of China's new energy automobiles reached new monthly highs, with the annual production and sales volume reaching 705.8 million vehicles and 688.7 million vehicles respectively, increasing by 96.9% and 93.4% respectively compared with 2021, and the penetration rate reaching 25.6%. From January to May 2023, the production and sales volume of new energy automobiles reached 300.5 million vehicles and 294 million vehicles respectively, with year-on-year growth rates of 45.1% and 46.8% respectively, and the penetration rate reaching 27.7%, which is the main driving force for the growth of the Chinese automobile industry scale. The continuous increase in the penetration rate of new energy automobiles has pulled the quantity and price of automobile wire harnesses to rise simultaneously.

Especially in recent years, consumers' requirements for the charging rate of new energy automobiles have been continuously increasing. To further relieve consumers' "driving range" concerns, major automobile manufacturers have been making efforts to develop 800V high-voltage platforms. Models such as BYD's E3.0 platform, Porsche's Tycan, and XPeng's G9 have successfully carried the 800V platform. In addition, automobile manufacturers such as GAC Aion, Great Wall Motors, Avita, Li Auto, and Zero Run have also been actively laying out 800V high-voltage charging technologies. The 800V platform can achieve the same charging power as 400V by doubling the charging voltage and using half the current value, which can effectively reduce the requirements for the current-carrying capacity of connectors and wire harnesses, extend their service life, and reduce the volume of wire harnesses. However, at the same time, the upgrading of automobile manufacturers' charging technologies has put forward higher requirements for the mechanical properties, electrical properties, and environmental properties of connectors.

The process of automobile intelligent transformation is continuously accelerating, giving rise to the demand for high-speed wire harnesses. The development trend of automobile intelligence will also bring new increments to the development of the automobile wire harness industry. According to data from Gaogong Intelligent Automobile, from January to October 2022, the penetration rates of domain controllers in the driving, cockpit, and body domains of domestic passenger vehicles were 5.28%, 7.61%, and 12.12% respectively, still at a relatively low level. Currently, most automobile manufacturers still adopt the traditional distributed architecture. Under the distributed architecture, in order to improve the intelligent level, the number of sensors carried by a single vehicle has increased significantly. Generally speaking, one vehicle-mounted camera or millimeter-wave radar requires 2 pairs of high-speed connectors (one pair to connect the camera, one pair to connect the controller) and the corresponding connection cables.

As the number of sensors increases, the demand for wire harness systems will also increase.

On the other hand, the intelligent cockpit has gradually become a standard configuration of vehicles, and the number of electronic components carried by vehicles has increased significantly. As the transmission medium of power and signals between various components, the demand for wire harnesses will also increase accordingly. In addition, as the degree of vehicle intelligence continuously improves, the requirements for data transmission capacity and timeliness are more stringent. Gartner estimates that each autonomous driving connected vehicle generates at least 4TB of data per day and PB-level data per year, giving rise to a large number of high-speed connector requirements, and the demand for high-speed wire harnesses will also continuously increase. The traditional distributed electronic and electrical architecture has gradually become difficult to undertake the continuous growth of automobile functions and complexity, and the centralized electronic and electrical architecture has been pushed onto the stage of history.

The centralized electronic and electrical architecture integrates the functions of ECUs, reduces the number of ECUs in the whole vehicle, can make the wire harness topology simpler, and will also reduce the length and weight of the wire harness. Under the background of the strategy of building a strong transportation country, the development trend of automobile intelligence has been continuously highlighted, and the function of automobiles has gradually changed from a simple means of transportation to a "third living space". The level of autonomous driving technology has been continuously improved. Especially under the transformation of electrification, a new type of integrated electronic and electrical architecture has been spawned, which is the best carrier for the application of intelligent networked technologies. Intelligentization with autonomous driving as the core has become one of the key points of competition among automobile manufacturers. In recent years, automobile manufacturers have been increasing their R & D efforts in automobile intelligence and actively promoting the implementation of L3-level and higher-level autonomous driving.

The L2-level assisted driving function has gradually become a standard configuration of more and more vehicle models. Data from the Ministry of Industry and Information Technology shows that in 2022, the penetration rate of new L2-level passenger vehicles with combined assisted driving functions reached 34.5%, an increase of 11 percentage points compared with 2021. In 17 test demonstration areas, 16 "double-intelligence" pilot cities, and 7 national vehicle networking demonstration areas across the country, more than 7,000 kilometers of roads have been upgraded to intelligent roads, and more than 7,000 sets of roadside networking devices have been installed. In the future, the penetration rate of intelligent networked automobiles will be further increased. The "Technical Roadmap for Intelligent Networked Automobiles 2.0" indicates that by 2025, the penetration rates of PA (L2 partial autonomous driving) and CA (L3 conditional autonomous driving) level intelligent networked automobiles in China will exceed 50%, and by 2030, the penetration rate will exceed 70%.