The Mercedes-Benz CEO Ola Källenius has sought to calm growing concerns over chip shortages, saying the German carmaker is “covered for now” regarding the essential components.
“For the short term, we’re covered and it goes without saying we are scurrying around the world to look for alternatives,” he said, according to a transcript of an earnings call from FactSet released today.
Källenius’ comments came as Europe’s car industry faces mounting pressure from a political dispute over semiconductor supplies, with chips used by European carmakers now restricted by China.
The industry, already struggling with weak demand, steel and microchips bottlenecks and fierce competition from outside Europe, could face serious production issues if the export ban continues.
Nissan and Mercedes-Benz are the latest global automakers to raise the alarm about the deepening semiconductor supply crunch, highlighting the fallout from a dispute between the Netherlands and China over Dutch chipmaker Nexperia.
On October 22, Volkswagen warned it could not rule out “short-term” production stoppages following the Chinese ban.
For the third quarter, Mercedes reported a 30.8 per cent plunge in net profit to €1.19 billion, dragged down by US tariffs and slumping sales in China.
Chip shortage fears intensified after China blocked exports from Nexperia, a Dutch company owned by China’s Wingtech, following a Dutch Government takeover.
On October 14, a Dutch court confirmed temporary government control, citing concerns that technology could be transferred to its Chinese parent company Wingtech and that European operations were at risk of being relocated.
ACEA, representing European carmakers, said today it is “increasingly concerned by imminent disruption to European vehicle manufacturing due to the block in supply of foundational microchips that are essential for our members’ manufacturing.” The chips are used in vehicle electrical control units and are crucial for production.
“While the political dispute that has led to the prohibition of Nexperia chip exports from China remains unresolved, the situation becomes more critical daily for global automotive manufacturing,” ACEA wrote.
The industry is currently using reserve stocks but supplies are rapidly dwindling, with some vehicle manufacturers already expecting assembly line stoppages.
“This is a politically induced situation where one of those nodes has been hit, which means the solution resides primarily in the political arena — between the United States and China, with Europe caught in the middle,” Källenius said.
Car industry companies said that while there are alternative suppliers, it will take months to scale up production and the automotive industry does not have enough time before the shortage starts hitting hard.
“We know all parties are working to find a diplomatic solution. At the same time, part supplies are already being stopped due to the shortage. Assembly line stoppages might only be days away,” said ACEA director general Sigrid de Vries.
“We urge all involved to redouble their efforts to find a diplomatic way out of this critical situation.”
