China Reshapes Global Traction Inverter Market; Huawei in Top 5: TrendForce
TrendForce’s latest report reveals that global electric vehicle (EV) traction inverter installations reached 8.67 million units in the fourth quarter of 2024 (4Q24), marking an impressive 26% quarter-over-quarter (QoQ) increase. Strong demand from China and Europe played a pivotal role in driving this growth, resulting in a 28% rise in installations for both battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) compared to the previous quarter. This surge significantly impacted market dynamics, allowing Huawei to break into the top five global traction inverter suppliers for the first time, a major milestone for the Chinese tech giant.
For the entire year of 2024, global traction inverter shipments totaled 27.21 million units. One of the key trends observed during this period was the increased adoption of silicon carbide (SiC) inverters. SiC inverters, known for their superior efficiency and performance compared to traditional silicon-based inverters, gained considerable traction thanks to widespread adoption by Tesla and leading Chinese automakers. The penetration rate of SiC inverters reached 16% in the fourth quarter of 2024, marking the highest level recorded for the year. This trend underscores the growing demand for advanced power semiconductor technologies and highlights the competitive nature of the industry.
China’s Increasing Influence in the Global Traction Inverter Market
The Chinese automotive industry has played a critical role in reshaping the global traction inverter landscape. The rapid expansion of domestic EV manufacturers, combined with strong government incentives and technological advancements, has positioned China as a dominant player in the sector. Notably, BYD, one of China’s leading automakers, surpassed Japan’s Denso in the third quarter of 2024 (3Q24) to become the world’s largest supplier of traction inverters. BYD continued to maintain its top position in 4Q24, further solidifying China’s influence in the industry.
The most significant development of the quarter was Huawei’s entry into the global top five traction inverter suppliers. Huawei’s ascent can be attributed to the remarkable success of its AITO EV series, which has gained strong traction in the Chinese market. With three of the top five suppliers now being Chinese companies, the traditional dominance of European, American, and Japanese suppliers is gradually eroding. This shift signals a new era in the EV supply chain, where Chinese firms are increasingly setting industry standards and dictating market trends.
SiC Inverter Growth and the Power Semiconductor Industry
The growing adoption of SiC inverters is a major factor driving the evolution of the traction inverter market. SiC-based power electronics offer significant advantages over conventional silicon-based inverters, including higher energy efficiency, reduced heat generation, and improved overall vehicle performance. These benefits make SiC inverters particularly attractive for BEVs, which rely heavily on efficient power conversion systems to maximize battery range.
Tesla has been a key proponent of SiC technology, integrating SiC inverters into its vehicles to enhance performance and efficiency. Chinese automakers have followed suit, accelerating the adoption of SiC-based solutions to compete in the increasingly competitive EV market. This trend has fueled growth in the power semiconductor industry, with major players investing heavily in SiC research and development to meet the rising demand.
Geopolitical Challenges and Their Impact on the Market
Despite the positive market trends, geopolitical factors continue to pose challenges for the global traction inverter industry. Before leaving office, the Biden administration initiated a six-month investigation into China’s SiC industry, citing concerns over supply chain dependencies and potential national security risks. This move is expected to remain a focal point under the Trump administration, which has historically taken a hard stance on China’s technological advancements.
The investigation into China’s SiC sector is widely regarded as a strategic maneuver to influence future U.S.-China trade relations. Given the increasing reliance on SiC technology in the EV industry, any restrictions or sanctions imposed on Chinese SiC manufacturers could have significant repercussions on global supply chains. Companies that rely on Chinese suppliers for SiC components may face disruptions, leading to potential price increases and supply shortages.
Additionally, ongoing trade tensions and regulatory uncertainties have prompted some automakers and suppliers to diversify their supply chains. Companies are exploring alternative sources for key materials and components to mitigate risks associated with geopolitical instability. As a result, nations such as the United States, Germany, and Japan are investing in domestic semiconductor production capabilities to reduce reliance on Chinese manufacturers.
Market Outlook and Future Growth Projections
Looking ahead, TrendForce forecasts that China and Europe will continue to be the primary growth drivers in the global traction inverter market. The increasing adoption of BEVs is expected to sustain high demand for traction inverters, as these vehicles require more advanced power electronics compared to conventional internal combustion engine (ICE) and hybrid vehicles.
China’s EV market, in particular, is projected to maintain strong momentum despite potential policy risks. The Chinese government has implemented various incentives to encourage EV adoption, including subsidies, tax breaks, and support for vehicle replacement programs. Additionally, Chinese automakers are expanding their presence in international markets, further bolstering the country’s position in the global EV supply chain.
In 2025, global traction inverter shipments are projected to grow at an annual rate of 14%. This growth will be driven by several key factors, including advancements in SiC technology, increased production capacity, and continued expansion of the EV market. While uncertainties surrounding policy shifts and trade regulations remain, the overall outlook for the traction inverter industry remains positive.
The rapid growth of the global traction inverter market highlights the increasing significance of China’s supply chain in shaping the industry. With companies like BYD and Huawei making significant strides, Chinese firms are now at the forefront of innovation and market leadership. The rise of SiC technology further reinforces the importance of advanced power semiconductor solutions, driving efficiency and performance improvements in EVs.
However, geopolitical challenges pose potential risks that could impact the industry’s trajectory. The ongoing U.S. investigation into China’s SiC sector underscores the complexities of international trade relations and the potential for regulatory interventions. Nevertheless, China’s continued investment in EV technology and global expansion efforts suggest that its influence in the traction inverter market will only continue to grow in the years to come.
