E-Mobility Boom In China, the Demand for Automotive Connectors is Exploding

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China's market for connectors is booming—driven by e-mobility and smart vehicle technology. Domestic manufacturers are rapidly catching up in high-voltage and high-speed connectors.

Not many markets in China are currently growing as fast as those for connectors. These are needed everywhere, in cars as well as in communication technology (5G, IoT), in computers and consumer electronics, in military technology, and in space travel. However, the industry is currently receiving a particular growth boost mainly from one direction: the rapidly increasing demand for high-voltage and high-speed connectors for electric vehicles, hybrids, and their charging infrastructure.

While the total value for the high-voltage connector market in China was 19.74 billion yuan (around 2.6 billion US dollars) last year, it is expected to grow to 30 billion yuan (around 3.9 billion US dollars) by 2030, according to a forecast by the specialist publication Yilan Zhongche.

Connector Paradise Car

Around 800 to 1,000 connectors can be found in a single electric car or plug-in hybrid today. This is significantly more than in traditional vehicles. At the same time, the trend from 400- to 800-volt architectures (and beyond) is increasing the technical requirements and thus the share of this critical component in value creation.

Automakers in China currently have to budget around 5,000 yuan (more than 650 US dollars) in material costs for connectors of all kinds, according to a market study by Guolian Securities. This is significantly more than before. Traditionally strong manufacturers such as TE Connectivity from Switzerland, Amphenol and Molex from the USA, as well as the German company Rosenberger, still dominate the Chinese market for automotive connectors. However, a clear trend towards "domestic substitution" is already emerging—as in so many other industrial sectors. In other words: Chinese companies are becoming increasingly strong and are capturing more and more market share from foreigners.

Chinese manufacturers are no longer content with producing connectors in the lower price segment. Companies like Shenzhen ECT (Electric Connector Tech), Shanghai Laimu Electronic, WCON, Luxshare Precision, Suzhou Recodeal, or AVIC Jonhon Optronic Technology are rapidly expanding their offerings in the area of high-voltage and high-speed connectors.

Growth is Expected

In China, more than 22 million electric vehicles and hybrids were already registered last year, more than in any other country in the world. This speaks to the success of Chinese manufacturers. When companies like BYD, Geely, or Li Auto become increasingly successful and take market share away from the Germans, Japanese, and South Koreans who once dominated the Chinese automotive market, it also has significant impacts on the rest of the automotive supply chains.

In the past, Chinese producers of connectors found it difficult to penetrate these supply chains dominated by large foreign corporations. However, the rapid rise of domestic OEMs now gives them excellent opportunities to do just that. Chinese manufacturers of connectors are also increasingly investing in their own research and development of high-quality connectors that can meet the demands for higher voltages and ever-faster data transfer rates.

One example: At the end of May, WCON Connector & Cable Assembly from Guangdong Province increased the equity of its subsidiary "Weikang Automotive" by 20 million yuan (around 2.6 million US dollars). The company aims with this capital increase to "further strengthen Weikang's financial and operational capabilities while advancing the research, development, production, and sales of high-frequency and high-speed connectors," reports Jiemian News.

Not only is the electrification of the entire Chinese vehicle fleet progressing, but trends are also moving towards increasingly smarter, connected cars equipped with ADAS driver assistance and autonomous driving functions. Market observers in Beijing predict a "golden era" for the Chinese connector market in the coming years, from which both foreign market leaders and Chinese challengers are expected to benefit. (sb)

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