Small, flat squares of silicon with maze-like patterns etched on their surface are now the backbone of pretty much every major industry. That means that trade barriers and disruptions in semiconductor production can have ripple effects across the world. That’s exactly what’s happening now, as a major European automotive chipmaker has found itself in the middle of a geopolitical firestorm between China and the West, which could upend car production.
Welcome to the Friday edition of Critical Materials, your daily round-up of news and events shaping the world of electric cars and technology. Also on my radar today: BYD profits plunged for the second straight quarter, suggesting that the world’s largest EV maker might be in trouble. Plus, Volvo planned to go fully electric by 2030, but now plans to sell gas-powered cars for much longer.
30%: The Auto Industry Is Weeks Away From Chip Shortage
NVIDIA DRIVE Orin system-on-a-chip
There’s a major dispute brewing between Dutch automotive chipmaker Nexperia and its Chinese parent Wingtech, several outlets have reported.
Nexperia makes basic semiconductors that several automakers still rely on, like those used for windshield wipers or window mechanisms, even though carmakers are increasingly moving towards more powerful chips amid the shift to EVs and more high-tech models.
Nexperia makes its chips in several European countries, but ships them to China for final packaging and assembly.
In September, the Netherlands reportedly took control of the company over national security concerns, worried that its Chinese parent was planning to shift proprietary technology to another company it owned.
Now both countries are caught in a tussle, with shipments to China and exports from the Chinese factory paused.
The Motor & Equipment Manufacturers Association (MEMA), the largest vehicle supplier association in the U.S., warned last week that American car factories were only a few weeks away from “significant impacts” to production.
And now a key electric drivetrain supplier to the Volkswagen Group and BMW in Europe has reportedly cut shifts at its production line in Germany.
Here’s more from Automotive News:
ZF Friedrichshafen, the world’s fourth-largest auto supplier, has cut shifts at its main electric drivetrain plant in Schweinfurt because the availability of important components has tightened, the people said, asking not to be identified because the information isn’t public. ZF supplies most major automakers, including Mercedes-Benz, Stellantis and Ford Motor Co.
The exact impact of this semiconductor snafu on the EV industry is unclear, but it feels like deja vu from the post-pandemic chip shortage, which left automakers struggling to secure demand.
The Alliance For Automotive Innovation, which represents major U.S. automakers including General Motors, Toyota and Ford, has urged the Dutch company to resume shipments. Some brands have secured short-term inventory and others are scrambling to find alternatives.
It’s yet another reminder of how fragile global automotive supply chains remain, highly vulnerable to protectionist trade policies as countries race to outpace one another for technological supremacy.
60%: BYD Is In Trouble
Photo by: Autocritica
The world’s largest EV maker saw its profits plummet for a second straight quarter due to the brutal price war in China and increasing competition from local rivals, Reuters reported on Thursday.
Its profits fell by nearly 33% year-over-year and sales were down for the first time since 2020, falling 1.8% to 1.15 million vehicles compared to the same period last year. At the same time, Geely, Leapmotor and Changan Automobile are grabbing a larger share of this market, indicating how the Chinese EV market continues to rapidly evolve.
And it’s not easy for BYD to make up for lost domestic sales in its overseas markets either. The automaker is constructing a car factory in Hungary to avoid Europe’s tariffs, but is now planning to run the plant at reduced capacity for the first couple of years.
90%: Volvo Will Sell Gas Cars Through The 2030s, At Least
Photo by: Volvo
In 2021, Volvo came out swinging with an ambitious plan to go all-electric by 2030. But the years between then and now have felt like a lifetime, with shifting EV demand and constantly changing policies.
Now the Swedish automaker is planning to continue making gas cars till the end of the decade, at least, according to CEO Hakan Samuelsson.
Here’s more from Automotive News:
“We need a second generation of plug-in hybrids that will last us until the end of the 2030s,” Samuelsson told Automotive News Europe, adding that it was essential to let customers decide when they are ready to go all electric. “We cannot dictate that.”
The automaker is also planning to manufacture an extended-range electric vehicle (EREV) in the U.S. EREVs have a backup gasoline generator, which can recharge the battery on the go. But only the electric motors drive the wheels and batteries can be plugged into chargers like regular EVs.
100%: How Can Carmakers Avoid Semiconductor Disruptions?
The automotive semiconductor industry is highly globalized and interdependent. A single chip might be designed in Germany, manufactured in Taiwan, packaged in China and installed in a car built in the U.S. One misstep at any of these steps means a production line on a different continent might get stalled. For you, that could mean fewer options at the dealership and delayed launches.
What can automakers do to become immune to this? Should they start fabricating their own chips? And what can countries do to protect their car companies from such disruptions?
Have a tip? Contact the author: suvrat.kothari@insideevs.com
