New scenario for compontes tier 2 manufacturers of electronic components for automotive

1. How HEV technology is shaping Tier 2 automotive suppliers
Hybrid and Electric vehicles, by design, introduce many new electronic components into
the bill of materials and account for up to 30% of the vehicles total cost. Years ago,
Toyota was the only manufacturer with a hybrid car in mass production, but Toyota’s
policy of integrating the supply chain into their own structure and utilizing only local
factories made it impossible to develop sub-suppliers specializing in these new
components. In 2011, all car manufacturers have one or several projects based on HEV
technology. This requires the development of a complete supply chain focused on these
new key elements for electric power.
Toyota Prius
Batteries, from the beginning, received the majority of attention and focus since they
represent the single largest cost in these new power trains. Alliances and joint ventures
have been created between car manufacturers and standard battery manufacturers with
targets of lowering costs, reducing weights and improving energy output. All battery
manufacturers are looking closely at the innovations, patent applications and movements
of their competitors. The companies who are quick to market with any advantages or
improvements in battery technology and performance will see greater profits - a very hard
challenge for an industry that has suffered from a lack of innovation for more than 20
years.
A full electric car has a bill of materials with an average of one third of the number of
components than a gasoline or diesel powered automobile. The number of components
required for the power train, by itself, is reduced to the battery, electric motor, charger and
power converter. The main costs and margins are now focused on the battery and the
electric motor set rather than in the internal combustion engine. Automobile are getting
involved in developing these key elements on their own as a key strategy to control and
keep in house these larger value-added components.

2. Plug-In Hybrid Power Train Design
Tier 1 suppliers are looking for other elements in the powertrain to realize profits and these
include the power converters and battery chargers. These elements transfer the energy in
the powertrain from the battery to the motor, charge the battery and generate the low
voltage power network to feed the car’s electronic systems (lights, entertainment system,
heating, etc.). The basic technology used in these power converters is very well known as,
in large part, the converters are switched mode power supplies with small form factors and
high efficiencies. High efficiency power supplies have been developed for many years for
use in other markets including UPS systems, solar panel generators, wind power energy
and industrial motor drives. Companies producing converters for these applications,
including Eaton and Bosch, can become new Tier 1 suppliers for these HEV platforms.
Their challenges will be in having to design and manufacture the converters for onboard
installation and to be qualified for use in automobiles.
In the same way, electronic Tier 1 suppliers for gas and diesel powered automobiles are
already transforming themselves to develop and manufacture power converters and
battery chargers. Lear, Valeo, Delphi and Continental are excellent examples of these Tier
1 suppliers and each now have converters and battery chargers in their product portfolios
and many will be in new HEV cars to be launched in the coming years.
Delphi DC/DC Converter
Key electronic components used in these new HEV power assemblies are
commonly utilized in the industrial markets and include high power switching
semiconductors, high energy capacitors and high power transformers and inductors. In the
automotive marketplace, electrical and mechanical constraints are dictated by the size and

3. volume available for the assembly, cost targets and required efficiency ratings.
Component manufacturers (Tier 2) have to adapt their business models to meet the
demands of this new potential market. The heart of the component technology is already
well known and in use in industrial applications but the new requirements of HEV make it
necessary for a complete reinventing of these components.
A high power planar transformer from PREMO Group
Infineon and Semikron are two power management IC manufacturers who have
focused on the HEV market for the last four plus years. Both have launched automotive
qualified semiconductors ready for integration into HEV converters and have dedicated
departments to support car manufacturers and to develop R&D kits and application notes
for their MOSFETS/IGBT’s. Their target is clear: to make completely off-the-shelf parts
available and to reduce the overall costs of their automotive customers.
In addition to the active components used in the converter, there are many required
passive components that have been the focus of Tier 2 suppliers. One such classification
is inductive components including power transformers, power chokes, current sensors,
EMI filters and auxiliary signal transformers. These types of components are commonly
used industrial applications but have never before installed in automobiles. PREMO is a
Tier 2 inductive component manufacturer that has experienced a major transformation in
their business model due to this evolution. Four years ago, Premo anticipated the future
needs of the automobile market for these types of components. Over this four year period,
Premo’s know-how, expertise and inductive components portfolio for industrial applications
has led them to be able to deliver standard, agency-qualified solutions for automotive
customers.
PFC Choke Developed for Automotive Applications
Onboard battery chargers for plug-in vehicles introduce a new technology challenge for
these companies. The charger connects the automobile to the domestic power network,
merging the requirements of the industrial world with the automotive world. The charger
must comply with all EMC requirements from these industrial standards while, at the same

4. time, fulfilling the lifespan, environmental, robustness and safety of automotive market.
PREMO is the first Tier 2 component manufacturer to make available to the HEV market a
complete off-the-shelf EMC Filter for battery chargers with complete AECQ-200
qualification. This filter is delivered in a single aluminum box with connectors, simplifying
the assembly operation for the charger manufacturer.
PREMO EMC Filter for Battery Chargers
Opportunities are in the air. Even with the conservative numbers the automobile
manufacturers are predicting for HEV unit sales in future years, the component suppliers
will need to initiate a complete conversion and re-tooling of their factories to reach the
capacity and output that will be required to support these programs. The production of
several hundred thousand EMC Filters of the type required for battery chargers is not a
simple task and no manufacturer has ever built one previously with the productivity and
automation level required by the automotive market. This is a very big challenge for
component companies who may be used to having a high operator workforce for their
industrial customers.
Claudio Cañete
Automotive Division Manager
PREMO Group
claudio.cabeza@grupopremo.com