The Shortage Of Chips For Cars Is Expected To Be Resolved By The End Of This Year

Shortage of car chips will cause car manufacturing to decline in 2021. (photo: enews automotive)

JAKARTA – As automakers gather in Munich for IAA Mobility 2021 in Munich this week to launch exclusively zero or low emission vehicles, the ongoing shortage of semiconductors casts a long shadow at the first major auto show since before the pandemic began.

Forced to close factories last year, the automaker now faces increasing competition from the consumer electronics industry for chip shipments. That problem was compounded by a series of supply chain disruptions during the pandemic.

Cars are becoming increasingly reliant on chips, for everything from engine computer management for better fuel economy to driver-assist features like emergency braking.

Speaking at the launch of several electric vehicles (EVs) on Sunday evening, Ola Källenius, CEO at German premium carmaker Daimler AG, said that his company expects chip supply to increase in the fourth quarter. As demand for chips soars means the industry could seek to procure enough chips by 2023, although the shortage shouldn't be too severe by then.

"Several chip suppliers have pointed to structural problems with demand", Källenius said. "It could affect 2022 and (the situation) may be more relaxed in 2023".

Joerg Burzer, head of supply chain at a unit of automaker Daimler Mercedes-Benz, said he expected the situation to stabilize in the fourth quarter. "Relaxation will come later", he said.

Despite the ongoing chip shortage, Daimler board member Britta Seeger said the automaker doesn't believe its long-term electric vehicle goals will be affected.

Automakers from US group General Motors to India's Mahindra and Japan's Toyota have slashed production and sales forecasts due to a scarce supply of chips, which has been exacerbated by the resurgence of COVID-19 in key Asian countries that are centers of semiconductor production.

Just last week, Chinese EV maker Nio Inc cut its delivery forecast for the third quarter due to uncertain and volatile semiconductor supplies.

Renault CEO Luca De Meo said on Monday 6 September that the chip shortage was more severe than expected during the current third quarter, but said the situation would improve in the fourth quarter.

Major auto supplier Bosch said it expected the shortfall to ease slightly in the coming months, but supply would remain limited through next year.

BMW CEO Oliver Zipse said the premium automaker expects the supply chain to remain tight through 2022. "I expect the tightness of the supply chain to continue in the next 6 to 12 months", he said.