New-car production lines in Europe could grind to a halt as soon as next week, as the industry scrambles to secure enough supply of semiconductor chips.
According to the UK’s Autocar, the Volkswagen Group may be one of the worst hit, with the German auto giant admitting it only has enough computer chips “until the end of next week”.
Semiconductor chips have become a key component in the manufacture of modern cars, with increasing competition from other industries – such as whitegoods and smartphones – making it more difficult for automakers to meet demand.
New cars now rely on semiconductors to operate most auxiliary functions, such as airbags, digital instrument clusters, and active safety systems like anti-lock braking.
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China recently suspended exports of chips made by Nexperia, following a decision by the Netherlands to take control of a local semiconductor factory, reportedly influenced by pressure from the US government.
The Dutch government claimed there were intellectual property concerns due to its ownership by a Chinese parent company.
There are now increasing concerns from the European Automobile Manufacturers’ Association, which says many of its members were “already expecting imminent assembly line stoppages,” according to the report.
It’s understood Volkswagen has already paused production of the Golf at its Wolfsburg plant due to the chip shortage, with the Tiguan, Touran, and Tayron set to follow – but it may just be the beginning of a widespread industry shutdown.
“We look on the issue day by day and week by week, and what we can say until the end of next week, we have enough supply,” Volkswagen Group CFO Arno Antlitz said during a financial call this week, adding that the German car giant was in talks with other chip suppliers.
“We have responsibility. So we try to find alternative sources, get it from alternative sources. We achieved that so far,” Dr Antlitz said on Thursday, per Autocar.
“We secure the production day by day and week by week. We are now safe until the end of next week, and the teams continue to work. For the time being, it’s good news that we are safe for another week.”
Governments around the world have been investing billions of dollars in developing local semiconductor factories, following chip shortages born from the 2020 global pandemic.
It was estimated the chip shortage cost the automotive industry approximately US$210 billion (A$290bn) in 2021 alone.
At the time, Volkswagen was forced to temporarily remove some features from its models to reduce the number of chips required.