Good morning, everybody. This is C.J. Muse, Global Semiconductor Analyst with Evercore ISI. We're pleased to be hosting NXPI as part of our semiconductor virtual meeting series. Recall NXPI hosted a radar teach-in conference call on August 27th, and today we have the great fortune of hosting Jens Hinrichsen, Executive Vice President and General Manager of Advanced Analog, along with Jeff Palmer, Vice President of Investor Relations, where we'll be taking a deep dive into the automotive battery management system market. I'm going to pass it over to Jeff for a brief introduction, and then Jens will walk through roughly 10 pages of slides. After that, I will host a bit of a virtual fireside chat. If you'd like me to ask a question on your behalf, please do email me your questions at cj.muse@evercoreisi.com. We have 60 minutes, so please do send in your questions.
With that, let me turn things over to Jeff.
Great. Thank you, C.J., and good day to everybody on the call. I'd like to welcome you to the second installment of the NXPI teach-in series. As C.J. mentioned, today we will present an overview of the automotive battery management market and what we view as our unique opportunity. The call is being recorded, with a replay along with the associated slides will be available on the NXP IR website within 24 hours. Please be aware, today's call will include forward-looking statements that involve risks and uncertainties that could cause NXPI's results to differ materially from management's current expectations. These risks and uncertainties include, but are not limited to, statements regarding the evolution of the automotive BMS market, the sale of new and existing automotive BMS products, and our expectations for long-term revenue growth in the automotive BMS market.
For more information on forward-looking statements and more complete description of these risks and uncertainties, please refer to the slide entitled "Forward-looking Statements" and the associated slides as well as the risk factors listed in our SEC filings, copies of which are available on the NXP IR website. Please be reminded that NXPI undertakes no obligation to revise or update publicly any forward-looking statements. Now I'd like to turn the call over to Jens.
All right. Thank you, Jeff, and also thank you, C.J., for hosting us today. Good morning, good afternoon, everybody. My name is Jens Hinrichsen. I'm in charge of the NXPI analog business. Today I have the pleasure to present to you our battery management business in NXPI. In our today's session, we will look into the development of the electrification vehicle market and explicitly into the market of the battery management systems. We will look into the challenges the OEMs are facing in this rapidly evolving market, and we will show you how NXPI's unique value proposition is perfectly tailored to address these needs. Furthermore, at the end, we will show you on how based on our partnership with leading car makers as well as battery makers, we have a clear path towards the leadership in this market.
We'll wrap it up by then giving you an idea on how our development in this market will look like. Without any further ado, let me move into the material, and we will start basically with showing you on how this electrification market will look like. Basically here to the left, you will see basically the light vehicle production evolving over the next years towards 2030. In bluish, we indicate on how the electrification platforms will develop within this market. You see here that year- on- year, every year, the electrification vehicles are constantly increasing, and we expect that by roundabout 2030, half of all the vehicles being sold contain an electrified powertrain.
This is to a large extent also driven by legislation demanding really drastic decrease of fleet CO2 emissions, but also in current years and in even in more challenging years impacted by COVID-19 pandemic crisis, where the car production is really taking a hit. You see that the electric vehicle or the electrified vehicle platforms are still increasing. This gives us a good path forward into the future. Looking on a more global basis, you see that China is still clearly leading the market adoption of electric vehicles. In Europe, there is increasing leadership in the areas of the hybrid platforms, very much driven by the fleet electrification, also really related through the Green Deal effects, where car makers completely electrify their entire fleets. Looking at the U.S., Tesla stands out, stays strong, no doubt.
Also here, we hear from the Big Three in the U.S. an increasing focus on xEV vehicles for the future. This is really exciting. Not only that the market is really growing strongly, and the other point we like to make here is that we do see that the emerging market has reached a certain inflection point. What I mean with this is that we have basically reached a tipping point where we are moving from a smaller niche volume business in towards a true high volume automotive mass market. Some proof points outlined here below. We do see that the cost parity of electrified vehicles versus combustion engine vehicles is expected in the timeframe of 2024 roundabout. We do see constantly the performance of these electric vehicles improving. This is driving really convenience as well as consumer confidence, therefore.
Miles, sorry, ranges in miles around 400 are possible. Fast charging is established and also the infrastructure of the chargers is really significantly increasing, like you see here with 7 million chargers outlined here in 2019. What we are also facing is that the number of annual xEV model launches is really increasing pretty much every year. In the last seven years, I think, in average, we had 20 launches per year. In 2019, we had around 100, and even in 2020, we are seeing approximately 120 model launches per year. This is really giving us a good idea that this market is really moving towards a real true high-volume automotive mass market.
That basically puts quite a few challenges onto the OEMs, and to be successful in this market, they continuously need to drive down the cost of their solutions, further optimize the performance of their systems. With getting more and more power and energy into the batteries, you can understand also with the establishment of fast charging, that there's an increasing need for functional safety. The increasing competitiveness in this environment is really driving towards short innovation cycles and to leverage really the economy of scale of this higher volume business. Scalable platform approaches are more and more needed to really leverage the volume effects. All the car makers and the battery makers really need to become ready for true high-volume automotive grade and automotive quality mass market production. Quite a dynamic in this market, with pretty positive outlook going forward.
Let's dive a bit more into the details of the technology. What I did here is, we used a car and try to simplify a little bit an electrified powertrain, and in this case, it's a hybrid car. As this is a hybrid car, you still see the gasoline engine here, the combustion engine, and you do see the electric engine. The combustion engine is basically controlled by a control unit, and the electric engine is basically powered by an inverter platform. You also do see, typically in a car like this, a low-voltage battery and a high-voltage battery. The low-voltage battery is just simply to support and supply the board net. While the high-voltage battery, that's, of course, the energy source for the electric motor. Since we have a low-voltage and a high-voltage network, you need a DC/DC converter.
Here in this car, we also established an AC/DC charger, which is basically for onboard charging purposes. This is pretty much a plug-in hybrid here. In the middle, you see a center brain, that's the power domain controller. That domain controller is very much orchestrating this entire domain and the entire electronic systems in this domain. The focus of today's session is highlighted here in green. We will look into the battery management system, which is another part of this solution here. The battery management system is related and attached to the battery, and the battery management system is constantly monitoring and controlling the high-voltage battery, and is therefore an essential part of this powertrain. If we dive further into this one, and I want to do this on the next slide.
We dive into the modules I have outlined earlier on. I really like to dive into this to come to the level of the semiconductors being needed in these different modules. Again, you see the low-voltage, the high-voltage battery, the electric motor, and the combustion engine. It's pretty much the same setup as in the earlier page. You see that in all these modules, a lot of semiconductors are needed to control and monitor the systems. This is all highlighted in green here. These power control systems, all these solutions are offered by NXP. This is basically where we leverage our capabilities on, and this is what we are offering to the market.
What we are not offering to the market are the power semiconductors, and you see them partly here as MOSFETs in the DC/DC converter, but to a large extent, the IGBTs or the silicon carbide solutions in the inverter platform. The power discrete solutions we are not offering. We only do offer these monitoring and control electrics and electronics for these systems. What we basically offer in a more generic view is that we are offering usually the electrification processors needed for this, and these processors will be supported with the power management ICs. It will be supported with the networking and connectivity solutions as well as sensors and drivers. Of course, we are also offering the analog front-end, so the typical battery cell controllers for these systems. The focus is, like I have said, on the battery management system, which is outlined here and framed in orange.
This is basically where we look further into. This battery management system has, as I mentioned, basically the function to constantly monitor and control the high-voltage battery of this powertrain. It is pretty much in real time, constantly checking the state of health, the state of charge, and the state of function of the particular battery. The more precise the battery management system as a whole can do this, and the more accurate it can really do measure it, the more you can unleash the basically embedded power and energy of this particular battery, which has got a direct effect on the range and how far you can drive with this car based on this battery charge. This monitoring and control also needs to be done in a very respectful and responsible way, so that you constantly ensure operations at any point of time.
It needs to be really done in a very safe way. It also needs to be done in a way that the battery, where you're really reaching a little bit the boundaries of physics here, are not damaged. You need to ensure that the battery is not damaged while you really leverage the maximum out of the battery to ensure really also long battery lifetimes. This is a key integral function of this electric powertrain. This is really needed, and this is what the battery management system is doing. Usually it has got a processor in the middle where also the entire embedded software is running on. It's basically supported by a PMIC and a network solution to be connected to the outside world. Of course, the analog front end, so the cell controllers, which are constantly doing the monitoring of each particular cell.
Let's leave the systems for a minute and look into the market of these battery management systems. We have outlined here on this slide, basically on top of the chart, the battery management system, BMS. The market outlook and the market development, underneath you do see NXP's ambition and NXP's plan within this market. In gray, to the left side, you see what we have presented in our Investor Day in 2018, and in blue is our latest estimate based on September 2020 outlook. You do see here that we see the market in 2020 to be round about half a billion dollar in size, growing with this 32% CAGR going forward, reaching approximately $1.1 billion by 2023. NXP is planning to grow with a 60% CAGR, approximately 2x the market in the same time frame.
Entering 2020 based on a $50 million run rate approximately, and despite of COVID, I've mentioned we do see also 2020 a strong year for the electrification business. We do see a very strong path forward into 2023, achieving a top two position by 2023 in the market. Let's see, and let's take a couple of minutes on how we are doing this. I like to reflect back to what I've mentioned in the first page, where I indicated that the market is at an inflection point, right? We are in a tipping point towards really true high volume, mass market automotive environment. This is putting quite a few challenges and opportunities for the battery makers as well as for the car makers in place for these battery management systems. We have basically outlined them here to the left.
The car makers constantly have to take the cost, the total cost of ownership out of their battery management system. They constantly need to reduce and work on cost reductions. They need to simplify the architecture. They basically need to simplify the bill of material, and they also, to really look at the total cost of ownership, need to find really smart ways on having a very simple and mostly automated way of assembling the battery, the battery packs, as well as the entire system within the car. You do need to also see that they constantly need to work further on establishing the performance of these electrified vehicles. Constantly the range extension is really important for the consumer confidence and for their momentum on adopting, really, these cars into their daily lives. Lower charging times are needed.
That basically requires that you handle way more power within the battery, and that requires really high level on functional safety requirements. It also requires pretty high requirements on accurate diagnostics, where the OEMs constantly need to work on. Since the CO2 emissions, especially in Europe, drive really drastically here the need for reducing the CO2 emissions on fleet level, you see that lot of established OEMs are now transforming entire fleets into electrified platforms. They need to find a scalable approach in doing this. They need to work on platform concepts. They need to find maximum level of reuse across all their brands, across all their modules. This is really important. Like we outlined in the first slide, by 2023, we approximately expect that there will be up to 20 million electrified vehicles being produced in the market.
The car makers need to be ready for truly high volume automotive mass market production. They need to basically find ways to do this manufacturing also to the highest level of automotive quality standards, and also establishing really longevity programs and long time service activities. That is basically looking at these challenges. This is actually where NXP's value proposition comes in. We are a true leading automotive semiconductor supplier, which is really having in everything we do, all the operational excellence requirements, all the automotive robustness and quality expertise really embedded in our DNA. Our precision analog capabilities really help to really further improve the performance of these cars and to unleash the full power of the battery. Furthermore, we have a very scalable approach of what we are doing, so that you can basically use our system across all the different electrification levels.
Last but not least, our approach on working on system level and really also ensure highest level of functional safety helps a lot for these car makers and also the battery makers to optimize the entire systems towards really taking the cost out of the organization. This is really on how NXP's value proposition is addressing truly the needs of the OEMs for the future. Let me dive into two items, or maybe I go back. Sorry, I was a bit too fast. Let me dive into two items I like to elaborate a little bit further. This is the scalability and the system solutions, because they are really truly key elements of our value proposition. Let's start with the scalability. The scalability, as outlined here in this slide, and you see here again the battery management system as I presented in the earlier slides.
This solution here, where we are offering a common hardware chipset, can be used across all the levels of electrifications. So it can be really used for micro-hybrids, so for simple start/stop systems. It can be used for mild hybrids and full hybrids, for higher voltage levels, and it can be used also really for high-performance plug-in hybrids and high voltage electric vehicles, even up to 800 volts. It's pretty much always the same hardware concept we are using. The hardware chipset has really a common data acquisition and a really common communication protocol, and a functional safety concept embedded here on hardware. Where the real scalability comes in is that we put really a common software driver on top of this hardware platform, which is then really one coherent interface to the application layer.
The car maker basically has to develop the car application, so the OEM application software. Since they have only one platform here, they can basically develop this and can reuse their application software across all the vehicles and all the electrification levels in their particular fleet. This is really truly a high reuse and ease hardware and software qualification, and a very simple system-level functional safety certification across all the different levels. That is really truly the advantage of our scalability concept. The other item I wanted to highlight is really our system play, our system solution approach. Bear with me, we need to go 1 level deeper even into a battery management system.
In all the other slides, I have shown the battery management system has the processor, where the software runs on, and then it's connected here to the outside world with our network and supported by a PMIC. Usually we are showing the analog front-end with the scalable cell controllers controlling the cell. If you really dive in like we have done it here, there are even more functions where more semiconductors are needed. Between the processor and the module, you also do see that you need to have an isolated communication. You have thermal management, so really the climate control of the overall system. You find needs to really constantly measure the pressure of the battery as a kind of safety net to monitor the battery even further.
You also do see that battery junction boxes are needed, and they are needed to basically monitor the full pack level while the cell controller is only controlling the cells. Next to the analog front-end, we increasingly see that customers need security solutions, authentication devices, or also identification devices to basically do service or reuse or tracking of certain battery and battery packs. There is a lot of semiconductors being used in a battery management system, and the exciting thing is that NXP is providing all these solutions here in green in a system approach, and this is a true differentiator we are having. All NXP's embedded control and high-precision analog solutions are really coming along in this complete system.
That really enables us to work with the car makers and also with the battery makers on constantly, let's say, optimizing the system partitioning in total, to drive interface standardizations and to create really innovative use cases and innovative system architectures. We offer fully validated reference designs, completely equipped with software as well, which is really good plug-and-play, helping the car makers to have real quick proof of concepts and pilot runs. We offer coherent functional safety concept really on system level. It's not on component level. It needs to be done on system level. Like I have mentioned, we also offer the drivers, the software drivers, which are really a part of the overall solution as well.
Also keep in mind, this thing, this is a very noisy environment, and it needs to put into a car, and it is really important that we help the car makers really to enable that this entire solution is really working perfectly well on car level. This is why we also offer system level EMC robustness to make that fairly easy for our car maker. That is our system approach, and hopefully I could illustrate this with this slide. Moving on, I like to look into one more element on how NXP is doing the business development and how NXP is operating in the market. You can imagine with the items I have mentioned right now, based on our value proposition, that our go-to-market approach is very much leveraging our close relationship to the car makers as a leading automotive semiconductor vendor.
It is also based on a strong strategic partnership with the leading battery makers, as outlined here in this slide. What you also do see here, and it's really also important to understand, that the supply chain for the electrification business, and therefore also the supply chain for the battery management business, is really a bit different than the typical classic automotive semiconductor supply chain, which is usually a more horizontal approach, where the car makers and then the large tier ones and the chip makers are basically working together. Here, the battery makers and their collaboration with cell makers and the tier ones who do the electronics integration, are really playing a major role in this triangle of creating these solutions together, and NXP has a strong relationship to both key partners.
We outline to the right a little bit on what is really the value proposition we have here, or what is the value we offer to the car makers. You understand, and I mentioned this already a bit earlier, we really truly help the car makers in their system integration to bring that full system work really on car level. We help them, so we cannot do this alone, but we help them to really drive the battery system integration on vehicle level. We work with a lot of them on very innovative use cases for the future, and therefore on future system architectures. We increasingly drive standardization, especially also in the field of connectivity and interfaces. Of course, we are really a true partner to support them on their high volume ramp up, especially with regard to automotive quality standards and automotive operational excellence.
Battery makers, they really enjoy working with us on leveraging our help to basically bring the electronics integration on battery level together, and that they work with us on unleashing really the true potential of the battery cells, which is basically done by electronics. Basically by the combination also of the hardware and the software of our solutions we are offering. We help them with our validated reference designs to really truly reduce their time to market to get this real quick, and that they can also have a very scalable approach to offer their solution towards multiple OEMs. As a true global player, we have pretty much our system and application experts really on-site helping the battery makers to fulfill this work. That is really making us a trusted partner in this triangle with the car makers as well as with the battery makers.
This is a bit on how we foresee on how we will develop in the market going forward based on our go-to-market approach with the car makers and the battery makers. We are successfully designed in 16 out of the top 20 car makers with our battery management projects. We are basically winning, and I hope that resonates after what I have mentioned, very much to high volume automotive OEMs who are looking to electrify their entire fleet, multiple brands and multiple electrification levels. This is very much our scalability approach resonates very well. We work with leading battery OEMs who also leverage the scalable BMS solution to have solutions available for multiple car makers. We work a lot with very fast-moving automotive OEMs, mainly in China, who are looking for complete system solutions to really reduce their time to market.
Of course, we are a perfect fit for a lot of emerging OEMs in this business with our complete system solution approach. We expect that by 2023, one out of four electrified vehicles will use NXP's BMS system, and that all the revenues we are foreseeing by 2023, they are already 75% underpinned with confirmed design wins and with basically platform approaches for 2023. This is how we see our success in the market resulting basically in this concluding wrap-up slide. For you to remember, the market is strong, the market is evolving rapidly. It is at a tipping point towards really true high volume mass market, and it is moving from half a billion to over $1 billion in 2023 with a 32% CAGR.
NXP expects to grow twice as fast as the market with approximately 60% CAGR, leveraging, like I have mentioned, our system play, our scalable platform approach, our functional safety expertise, as well as our true automotive expertise. Built on a run rate of $50 million approximately in this current time frame, we do see us on a straightforward way towards a top two position in the market, 75% of the projected revenues in 2023 are already awarded and underpinned by confirmed design wins. This is all I have for today, and I hope you are as excited about NXP battery management business as I am. With this, back to you, C.J. Thank you.
Well, thank you, Jens. Very thorough, exciting presentation, thank you. Let me remind the audience that if you want me to ask a question on your behalf, please email me cj.muse@evercoreisi.com. We have about a half hour, Jens. I guess I wanted to break out our conversation into three segments. One, sizing the market. Two, really digging deeper into the competitive landscape. Three, kind of walking through the design win side of things. First in terms of sizing the market and thinking about the growth drivers. I guess, a near term and a medium term question. The near term is that it does look like the sizing for the market this year, is lower than what you presented in 2018, roughly $500 million versus $600 million, by looking at the charts.
Can you discuss what is perhaps COVID related, versus perhaps other drivers, such as maybe software issues at VW that led to that? The medium term question is, as you think about the impact of the pandemic, do you agree that that's accelerating demand for electrification? We'd love to hear your thoughts on those two points.
All right. Yeah, thank you, C.J. I think you're right. If you really look at our 2018 projection versus what we foresee right now, there is a slight difference in the market outlook. I think it is always fairly challenging to really project the market in the longer future direction. From that perspective, it is not that much off, but it is slightly lower, you're right. This is, to a large extent, really related to the overall pandemic impact. The car production is significantly down, so it is slower, and there is basically a bit of a push-out in the market. Although, if you look at the electric vehicles, they are still relatively well and still growing, even in this environment, but not as fast as we were envisioning 2018, where we didn't see this crisis coming. This is the main reason for the delta.
We also do see, and I think you read it in the press, there are some launches of some platforms which are a bit delayed for larger programs. I think that is not changing the market expectation massively, maybe slightly, the dynamic in the short-term future versus what we anticipated early on. That is basically not the major impact. The major impact is really the overall economy impact related to the COVID crisis and the overall lower car production. That is the part on that element. On short term, I mentioned already, I think it is really good to see also in 2020. The year is not over yet, but what we are seeing here is, so far, is that really the amount of electrified vehicles being produced in this year is even stronger than in 2019.
This is good news, while, of course, we all do see that the overall light vehicle production is significantly down. That is, first of all, really a clear sign of the increasing adoption rate. It's also a bit pushed by really some stimulus programs, and also tax incentive activities, which are also partly related to COVID and COVID recovery, because they are also very much focusing around electrified vehicles and driving really this short-term adoption and demand a bit up.
That's great. I guess trying to perhaps dig a bit deeper into content versus penetration and try to weave in an investor question. The investor question was, how do we think about the revenue opportunity to NXPI, as you look at plug-in hybrid versus hybrid versus full EV? We'd love to hear your thoughts there.
Right. From a battery management system point of view, it doesn't matter so much on whether you have a plug-in hybrid or whether you have a full electrified vehicle, right? The battery management system is they're pretty much the same, and this is really not too much of a difference. In general, basically, we do see, and you have seen it, that the value of a battery management system in average, and you see based on the numbers we are presenting, is somewhere in the area of $50-60. It is, of course, varying depending on the voltage range of the particular platforms. We cannot disclose in further detail on how NXP's revenue split across these platforms is.
We also do see that this, basically, this average sales price and the content is pretty much staying stable over the course of the next strategic horizon, as outlined here until 2023.
If I could weave in another question. You answered the first part in terms of the $50, $60 content. The next question was, given OEM's focus on costing down, are you able to hold pricing and provide more value, or is there annual price declines that we should be thinking about going forward?
Yeah, that is a good question, C.J. We have in our model factored in an annual price reduction, which is normal in the semiconductor environment, so that's what we figured in. We also figured in volume effects. There will be economy of scale effects, also having a bit of a pressure on the ASP. This is a really, still very young market, right? A lot of innovation is happening, and you see the content and the complexity of semiconductors is really increasing significantly with all the innovations coming in. That is compensating the effect, and this is why we envision the content and the average sales price staying pretty much stable over the horizon.
I guess just to complete the thought process around sizing the market. You're talking about a $1.1 billion market TAM, by 2023, what would lead to upside to the forecast? Would it be content or just simply EV penetration?
I would probably say that the biggest lever here would be really the penetration of the electric vehicles, the increasing consumer confidence and then higher adoption rates of the electric vehicles. That will probably pull this further up. While we do see the market growing with 32% CAGR, this is already pretty strong.
Yeah, that's not complaining. I guess maybe moving over to the competitive landscape, and I think that this presentation really highlights scalability and your full, complete solution, including the optimized precision analog front-end, interconnect back-end processor, safety algorithms. Whereas your competition really focuses just on that precision analog front-end. Is that the major driver of your design wins? If yes, please elaborate, and if not, what else is driving it?
C.J. Thank you. This is right. Fundamentally, the difference is that NXP is really providing a complete scalable solution, right? Next to the offering of the precision analog front-end, which is really this cell controller, we really complement our solution by the tailored processor, which is then supported by power management and the networking connectivity. Then on these processors, we usually add the software drivers, right? On top of this hardware platform. The combination of the complete hardware solution and basically software then make it also very scalable, right? Then we can also really truly provide and support the customers on establishing a true functional safety solution on system level. This really resonates very well with many of our customers and explicitly with customers who really truly want to electrify their entire fleet, right? Enjoying the scalability of our offerings.
It also resonates very well to customers who are really new market entrants and do not have the full active electronics expertise here and looking for a partner to help them to establish these solutions. It's really resonating very well with our customers.
That's great. I guess I've gotten a number of questions on the competitive landscape. I guess I'll try to weave it into another question, which is, when you talk to ADI and Maxim, they talk about very high precision within the analog front-end construct. I guess, how do you fare in head-to-head competition with them there? Just to bring in the other questions. Other folks are talking about gaining share as well. When you talk about gaining share yourself, is that you truly taking share or is the pie just growing? I guess sitting here today, who are your top competitors?
Right. Yeah. Thank you, CJ. I mentioned this one also in my presentation. You're right, the accuracy of the battery management system, right? The accuracy of the diagnostics of this battery management system is indeed a critical parameter, right? I mentioned the more accurate these solutions are, the more you can leverage the power and the energy density out of the batteries without really damaging the cells, right? Resulting into longer range and longer lifetimes of the batteries. This is really essential. Looking at our performance, we are definitely, and I need to be here a little bit more relative, I think we are truly on the top tier of this scale regarding the accuracy. We also do guarantee this after soldering over lifetime without calibration. A lot of competitors do not offer this one.
This accuracy is a complex item, right? Therefore, I'm a bit hesitant to mention here specific numbers because I like to really share that the accuracy of the system is not depending on the accuracy of the analog front-end only. It's really, again, a system-level accuracy and which is a combination also of hardware and software. A lot of accuracy is also achieved with the software. To really achieve the true system-level accuracy, you need to look at both elements. Therefore, I'm a bit reluctant to give there really some hard specific, let's say, parameters which might lead to a wrong assumption. That's the part on the accuracy. On the competitors, I think you do see that there are quite a few incumbents around and that there are a couple of really strong players.
I think the key players in the market, this is now from my perspective, not in any order, I just say this, there's definitely ADI and Maxim being around. There's definitely NXP being around. There's also definitely TI. We do see Panasonic and also Denso in Japan, there's also quite a bit of, how shall I say, a captive portion of the market related to Panasonic and Denso. These are the key players, right? For us, it is important that our value proposition is really addressing all these elements and not only one or two of these subsets.
Very helpful. Another question. All else equal, has being European helped sales in China versus U.S. counterparts?
Oh, sorry. Come again. The line was breaking a little bit, C.J. I didn't get that.
Sorry about that. All else equal, has being a European entity helped you, in terms of your sales in China, vis-a-vis your U.S. counterparts?
I think we are really a global company, C.J., and we have a lot of heritage in the U.S. and Europe, and also in Asia. We have a very close relationship with some Chinese leading players, basically leading car makers as well as battery makers, also very much related to a very strong local footprint. I think, basically, our success is more based on our service offering and our scalability and the solutions and the performance of the devices rather than that we are European.
That's great. Another technical question. Does the scalability from HEV to PHEV to BEV only apply if the OEM is building the different types of powertrains on the same vehicle architecture? Can an OEM use the same BMS on a separate HEV platform?
Oh, it really.
Sorry. Yeah.
Sorry. It is really scalable, completely across everything, like I have mentioned, right? It can be really scalable across the different electrification levels, but it can also be really scaled across the different models you have in a particular electrification level. You can use it for a fairly, let's say, simple sedan version versus maybe a high-end SUV or maybe even a high-end sports car. You can really do the scalability in all axes in their fleet portfolio.
That's great. One more competitive question. ADI and GM announced a wireless offering, using their proprietary Dust mesh network. Can you speak to how that impacts the competitive landscape, whether you will have a competing offering at some point?
Right. Yeah, that's a good question, C.J. Let me elaborate a little bit on this one. As mentioned earlier, I think there's really truly the continuous needs of the car makers, right, to optimize their battery systems and their electric powertrains. I think it's absolutely obvious, and I mentioned this one also as a key challenge, right? What they want to do is they want to reduce the total cost of ownership. The wireless communication between the battery cell module or battery cell controller and the BMS IC is indeed an interesting way to simplify the wiring harness, right? With this, you take basically cost out of the organization, and you also create quite a bit of design flexibility for the battery system within the car, and also here, an increased scalability effect.
This is an interesting approach, and also NXP is having a completely, fully validated reference design based on Bluetooth and like also other competitors are doing, and we are engaging with quite a few OEMs on these solutions. That's definitely an interesting trend to monitor. I like to look at this a little bit also from a critical angle, and NXP is really a leader in connectivity, and therefore, we have a bit of an insight in these connectivity solutions, and we are working with a lot of leading OEMs also on other technical solutions, which basically address the same problems. There are multiple ideas, I cannot disclose these, but to solve the same challenge, right, we are seeing here. There are different ways on getting there.
Somehow the concern is, this is something usually you can manage on a technology level, but you can imagine that a wireless communication between a cell controller and the battery management IC in a very safety critical environment needs to be really, really robust, right? If I connect my phone to my speaker, I'm fine with Bluetooth, right? Maybe it's a bit of an unfair comparison, but you need to really ensure that a wireless communication is robust, especially in this very noisy environment of a car, right? There are some challenges related to this, and they need to be addressed. We are also facing this, and we work on these challenges and the opportunities. All I'm saying is there are also different technologies addressing pretty much the similar challenge.
That's very helpful. I guess to complete the competitive landscape, maybe this kind of starts to push into the design win side. You're targeting both OEMs and battery makers. Curious, as you focus just on the battery makers, any metrics to quantify how you're driving advantage in terms of miles driven for those players?
I think it is always very difficult to translate directly features of our technology into a direct metric on extending range and performance or lifetime of certain batteries. You are right, C.J., that is a challenge. Like I've mentioned, everybody wants to work on further range extension and also basically on improving the lifetime of the battery. I have seen now batteries running 1 million miles. This is a real challenge. The battery makers really work with us on these topics. The key element is that they are putting increasingly more power and energy density into these battery packs, right? That is basically the fundamental thing. They work on the chemistry of the battery to really enhance this and enrich this, and you can only leverage the full potential of this power if your electronics manage this carefully and smart.
Therefore, like I said, the diagnostics features and so on needs to be very precise. Again, this needs to be done on system level, and that is something where we are basically offering accurate hardware, but also enhanced software solutions to leverage this one. This is where the battery makers really work with us. They want solutions on how we can enhance this further. I'm a bit puzzled by giving you a real metrics on what this directly analytically means.
Sounds good. I guess sticking with the current slide and moving to kind of sizing the opportunity for NXP, if I look through all the different numbers that you provided, you're essentially suggesting that the BMS business should grow from roughly $50 million today to at least $200 million by 2023. I guess, the first question is, you talk about 75% coverage from existing awarded wins today. When do you think you'll get the other 25%, considering that it's roughly a two to three-year timeframe between design win to time to revenue?
Yeah. You're right, C.J. I think the outlined number there for 2023 is in line with our view based on our current size of the business. That's absolutely true. I think you also mentioned this, the normal design to revenue cycle in automotive, it's approximately two to three years, right? Based on this, we have a pretty high degree of confidence on our 2023 outlook, which is really based on these design wins, where we are awarded to, and also the model ramps the design wins are on. Typically, this is a very high number at this stage, and there is plenty of open opportunities in the funnel, which are not yet officially awarded, but we have a very high confidence that we are making the 2023 number.
Excellent. On slide 10, you walk through design wins, and GM is on there, and they're going to be providing one of the next big platforms, a 1-million-unit target by 2025. Can you discuss what kind of work you're doing with them, if at all?
Yeah. Unfortunately, I cannot really disclose the details. We work here with various OEMs or battery makers. Please forgive me on this one, C.J. What we have done here, and let me clarify this, for illustration purposes, basically, we outlined here really the top 20 car makers, right? 16 of the top 20 car makers are using our or have designed in our battery management solution. I cannot really disclose which of these 16 are here on the list. Of course, we work with GM. They are a Big Three in the U.S. They are very innovative and they have launched interesting programs looking forward, but I cannot really disclose any details on GM explicitly. Yeah.
Makes sense. How about VW? That's the MEB platform that you've discussed publicly. Any kind of new information you can share in terms of the timing of that ramp and when we can see it hitting your numbers over the next one, two, three years?
No, I think we have probably the same information there. We all know a bit the status on the MEB platform. This is really a large, super scalable platform for all the electric vehicles Volkswagen is launching. This is really across multiple electrified vehicles, and they just announced the ID.3, and I think the ID.4 is now visible. It goes full steam. It's a bit delayed. You mentioned that already with regard to the software challenges they have had. The good news on that one for you is if you look at our revenues, you can imagine that the majority of the MEB platform-related revenues are still about to come and not yet in our numbers.
Very helpful. How about some of the emerging startups like Rivian, Nikola, XPeng? Can you talk about, obviously not specific to each name, but success with new entrants into the marketplace?
Here it's unfortunately, I really cannot do this, right? Because this is all under NDA. I mentioned here in the bullet point on this particular slide 10, which I'm showing, that our approach, explicitly the complete system solution approach, resonates very well with some startup companies. Because they look for whole solutions and explicitly also the electronics. This is partly really new for them. The more we can do pre-engineer, the more we can provide them reference designs, hardware and software concept, and if we can help them really on functional safety level, they really truly appreciate this because, for these startups, you know this very well, they have their arms full with work. Everything we can pre-engineer for them on system level, they appreciate. It resonates what we do. Hopefully, this helps, CJ.
Helpful. I guess a technology question. You're pretty clear that you're not focused on the power discrete semi side. Question is, does your system work better with the silicon carbide inverter, or are you agnostic to the power side?
We are completely agnostic to the power side. The battery management system itself is completely independent on what kind of power discretes are being used in the inverter. That maybe you can leverage the potential of the battery, maybe better with a silicon carbide solution versus maybe an IGBT. This is probably right. This has absolutely no impact on the battery management system. It doesn't matter for the battery management system at all.
That's helpful. I guess another technical question? You talked about controller software.
as an important contributor. Curious, other than selling the complete solution, how else does that create a competitive advantage for you?
The reuse of software is a critical element for the car makers, right? Look at the MEB platform launch, right? What was the challenge, right? Therefore, the more we can help the car makers to reuse the software, the more we can help them to basically simplify the development and also the qualification and the validation of hardware and software combined, the better it is. It is a real, very strong differentiator. The key is not so much to provide this software driver embedded on the processor. The key is that on the car maker side, their development of their complex application software can be as much simplified and reused as possible. From that point of view, our approach is very helpful and very, let me use the word sticky. Yeah.
Well, Jens, we're at the top of the hour, so I really want to thank on behalf of Evercore ISI and all the investors on the line to thank you for your time today. Jeff, thank you as well. I think you provided great information here. When I think about this slide deck and the growth here combined with the growth that you outlined on the radar presentation just a few weeks ago, a lot of exciting growth opportunities for NXPI within its automotive business. Look forward to hearing more as the months and years pass. Thank you.
Thank you very much, C.J. It was my pleasure. Thank you.
Thank you very much, C.J.
Take care, everyone.
Thank you.
Bye-bye.