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The semiconductor crisis was predictable and more so in the case of electric cars

The long waits for delivery of many of electric car models and unschedulable delivery dates. Two consequences of disruption of semiconductor supply chains that significantly harm the production of electric cars. The management consultant P3 has analyzed the problems of the supply chain identifying these obstacles as repeated mistakesand therefore predictable, similar to those continue to commit with the battery cells.

The lack of semiconductors also affects vehicles with a combustion engine, but to a lesser extent. That’s him main result of the analysis carried out by P3 Group. “Four years ago, we realized that the semiconductor would become the new battery cell,” says Markus Hackmann, CEO of the consultancy. Therefore, manufacturers that had prepared for possible bottlenecks would be much better at meeting the current challenge. What has caused the current semiconductor crisis?

A battery-powered electric vehicle has twice as many semiconductors than a combustion car. Specifically, P3 calculates that the difference, on average, is 1,300 to 600 for each car and most of them are located in the power train. Of all the components in an electric car, the inverter is particularly reliant on semiconductors.

a repeated mistake

The European automobile industry has become dependent on Asian suppliers. The P3 Group calls this a “repeated mistake” that had already been committed before with the batteries. This time, however, the big trigger was the Covid-19 pandemic. Fearing a drop in demand, many automakers canceled orders in 2020. However, the drop in consumption was smaller than expected at the same time that the demand for semiconductors from the entertainment industry grew enormously.

The subsequent alternation of blockades and opening combined with other negative factors such as the container ship crossing the Suez Canal, ended up causing the stagnation of supply. A problem that continues to this day. For example, the blockade in Shanghai is being eased very gradually, so the bottleneck in the world’s largest port is far from being resolved.

crisis Semiconductors electric cars-interior2
A battery-powered electric vehicle has twice as many semiconductors as a combustion car. Specifically, P3 calculates that the difference, on average, is between 1,300 and 600 for each car and most of them are located in the power train.

The seaports with the largest container movement, almost all of them are in Asia: Shanghai, Singapore, Ningbo-Zhoushan, Shenzhen and Guangzhou-Nansha. To make up the shortfall, ships currently sail at high speed without taking into account the extra oil consumption. In return, semiconductor prices have multiplied. The next bottleneck looms with the arrival in Europe, that is, in the ports of Rotterdam, Antwerp and Hamburg. These must handle the immense volume of merchandise that arrives.

At the same time, there is another fact that affects the influence of the automobile industry on the semiconductor market. Its power is not as great as that of consumer electronics. According to the calculations of Group P3, its market share only reaches 8 %. By contrast, 80% are used in consumer electronics.

In 2017, in a passenger car powered by an average combustion engine, about 2% of total costs of production are due to semiconductors. An average electric car of 2030 will require 6%, three more times. In addition to electrification, the automation of drives is essential for this development.

Semiconductors are also produced in different sizes for different purposes; for example, demand for semiconductors with small frame sizes below 150 nanometers will grow 10-fold, according to P3.

These are some of the components that require semiconductors in an electric car

  • In the power trainthe charger, the inverter, the DC/DC converter, the high-voltage battery, the central processor and the motor itself.
  • In the autonomous driving systemwhich in the future will be included in all electric cars: several cameras, multiple radars, ultrasonic sensors and steering and braking systems by cable required in automation levels 4 and 5.
  • The infotainment system and navigation, which also includes the entire digital control system, communication and update system.

supply chain transparency

Mauritz Schwartz, semiconductor specialist at P3 Group states that “in the current critical situation, we are building the transparency lines on supply chains”. Many parties involved in the automotive industry are unclear, for example, who is a real producer and who is just an agent. From the analysis, it could be improvements and more accurate delivery forecasts. Currently, it can take up to 72 weeks from the time an order is placed to the time the semiconductors arrive.

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In 2017, in an average combustion engine-powered passenger car, around 2% of total production costs are due to semiconductors. An average electric car by 2030 will require 6%, three times more.

However, in the medium term, the general situation could improve with new production locations in Europe. For example, Intel has announced plans to build a large plant in Magdeburg, Germany, in which it is going to invest €17 billion. Although Intel is not a regular supplier to the automotive industry, it will find its way into it. The reduction of distances in the transport of orders will eliminate intermediate stages.

conclusion

the automotive industry needs to reorganize. The trend to relegate semiconductors and battery cells to components sourced from arbitrary suppliers should end. However, it will probably be years before supply chains can get back to work smoothly and, where possible, relocate to Europe.

The disaster caused by the lack of semiconductors shouldn’t go without consequences. The importance of semiconductors will increase and they should receive more attention by trying to regionalize the purchase as much as possible.

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