Long waits, unscheduled delivery dates – disrupted semiconductor supply chains are significantly hampering the production of battery electric cars. Management consultancy P3 analyzed supply chain issues – and identified the problem as repeated errors, similar to those made in battery cells.
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The phenomenon of missing semiconductors also concerns combustion engine vehicles, but to a lesser extent. This is the main result of the analysis of P3 Group. “Four years ago, we realized that the semiconductor would become the new battery cell,” says Markus Hackmann, managing director of the consulting firm. He adds that automakers that had prepared for potential bottlenecks would be much better at meeting the current challenge. P3 gets to the root of the problem: What caused the current semiconductor crisis?
A battery electric vehicle (BEV) easily has twice as many semiconductors as an ICE car. Specifically, P3 speaks of a difference of 1300 to 600 per car. And they are mainly in the powertrain (600 to 300). The inverter is particularly dependent and heavy on semiconductors.
“Repeat error as with battery cells”.
In terms of value creation, the German automotive industry has become dependent on Asian suppliers – what the P3 group calls a “repeat mistake” that had been made before with batteries. This time, however, the big trigger was the Covid pandemic: fearing a fall in demand, quite a few car manufacturers canceled orders in 2020. However, the fall in consumption in the car market remained weak, and at the same time, the demand for semiconductors in the entertainment industry has increased enormously.
The subsequent alternation of confinements and openings of dams combined with other negative factors – let us recall, the container ship crossed in the Suez Canal – led to a regular stall. A problem that persists to this day. For example, the lockdown in Shanghai is only gradually being eased, so the gridlock in the world’s largest port is far from resolved.
If you look at the seaports with the highest container throughput, almost all of them are in Asia: Shanghai is followed by Singapore, Ningbo-Zhoushan, Shenzhen and Guangzhou-Nansha. Currently, ships are sailing at high speed without taking into account the consumption of heavy oil to compensate for the loss of revenue. The prices paid for semiconductors have multiplied, making this push financially possible. The next bottleneck looms after arriving in Europe, i.e. Rotterdam, Antwerp and Hamburg, as the ports have to laboriously manage the huge volume of goods.
Eight percent of car chip production
At the same time, the market power of the automotive industry is not as great as usual: only 8%, according to calculations by the P3 group, of all semiconductors are purchased here. In contrast, 80% is used in consumer electronics.
For a relatively simple ICE car in 2017, around 2% of total costs were due to semiconductors. A 2030 BEV will require six percent, three times as much. In addition to electrification, the automation of drives is essential for this development.
Here are some components that require semiconductors: In the powertrain of a BEV, for example, these are the charger, the inverter, the DC/DC converter, the high voltage battery, the central processor and the motor itself. same. For autonomous driving, various cameras, several radars, ultrasonic sensors and wired steering and braking will be indispensable in the future (levels of automation 4 and 5). Add to that the digital control unit and the infotainment system.
Semiconductors are also produced in different sizes for different purposes; for example, the demand for semiconductors with small structure sizes below 150 nanometers will increase by 10, according to P3.
Supply chain transparency
“In the acute situation, we are increasing transparency on supply chains at P3 Group,” says Mauritz Schwartz, a semiconductor specialist. Many parties involved in the automotive industry do not know, for example, who could be a producer and who is only an agent. From this analysis, improvements and more accurate delivery forecasts could be made. Currently, it can take up to 72 weeks from the time an order is placed for semiconductors to arrive.
In the medium term, however, the overall situation could improve with new establishments in Germany. For example, Intel announced its intention to build a large factory in Magdeburg and invest 17 billion euros. Intel is not a typical automotive supplier, but will find its place in this role. Short distances – to VW in Wolfsburg, for example – also do away with intermediate steps in orders. But do not expect very large volumes here before 2027. Much earlier, probably in 2023, Bosch of Dresden could help alleviate the semiconductor crisis.
The auto industry needs to reorganize. The obvious tendency to relegate semiconductors and battery cells to the status of components from arbitrary vendors is over. However, it will probably take years before supply chains can function properly again and (re-)locate some of them to Europe. The catastrophe caused by the lack of semiconductors must not remain without consequence: it must be regionalized. Since the importance of semiconductors will increase, special attention should be paid here. For those who wish to buy, the only thing to do is wait and see. At some point, the system will be balanced again.
p3-group.com (in German)
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