VW, Ford, Daimler fear chip shortage could persist for some time


Technicians work in the assembly line of German carmaker Volkswagen’s electric ID. 3 car in Dresden, Germany, June 8, 2021.

Matthias Rietschel | Reuters

Car manufacturers including Ford, Volkswagen and Daimler are still struggling to deal with the impact of the global chip shortage, with executives from each of the companies warning a lack of silicon is likely to remain a problem.

Volkswagen CEO Herbert Diess, Daimler CEO Ola Kallenius and Ford Europe chairman of the management board Gunnar Herrmann told CNBC’s Annette Weisbach at the Munich Motor Show on Monday that it’s hard to tell when the complex issue will be resolved.

Germany’s Volkswagen, Europe’s largest carmaker, has lost market share in China as a result of the chip shortage, Diess said.

“We are relatively weak because of semiconductor shortages,” he said. “We are hit more in China than the rest of the world. That’s why we are losing market share.”

Diess said his colleagues in China have been pushing for more semiconductors, describing the lack of chips as a “really big concern.”

The Wolfsburg-headquartered company was expecting the semiconductor situation to improve after the summer holidays but that hasn’t been the case. Malaysia, where many of Volkswagen’s suppliers are based, has been hit hard by the coronavirus in recent weeks, leading to several factory shutdowns.

Diess said he believes the chip shortage issues will start to dissipate as countries reduce Covid-19 transmission, but he expects there to be a general shortage of semiconductors for some time. “We will face a general shortage of semiconductors because the internet of things is growing so fast so there will be constraints which we will try to manage,” he said.

Raw materials crisis

Ford Europe’s Herrmann, meanwhile, estimates the chip shortage could continue through to 2024, adding that it’s difficult to pinpoint exactly when it will end.

The shortage is thought to have been exacerbated by the move to electric vehicles. For example, a Ford Focus typically uses roughly 300 chips, whereas one of Ford’s new electric vehicles can have up to 3,000 chips.

Beyond chips, there are now other shortages to contend with. Ford is facing a “new crisis” in raw materials, Herrmann said.

“It’s not only semiconductors,” he said, adding that lithium, plastics and steel are all in relatively short supply. “You find shortages or constraints all over the place.”

Car prices will rise as the cost of raw materials goes up, Herrmann said.

Despite the imbalances, Herrmann said Ford Europe’s incoming order bank was “fantastic” and that “demand is actually extremely strong.”

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