Unprecedented Global Chip Shortage Pushes Electric Vehicle Delays Into Years

Lord Ganesh

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Electric vehicles have gained a lot of traction recently, as they’ve become both cheaper to produce and more accessible to the general public. Some electric vehicle companies are even rumored to be at least doubling their production shortly, which has led to an unprecedented global shortage of chips that power electric cars—which could delay those companies from reaching their goals.

Overview of the Situation

Global chip production is at a minimum, causing shortages that are pushing electric vehicle production into years. The shortage is not just affecting the automotive industry, but also the semiconductor sector and other industries that rely on chips in their products. With this being the case, it would be unwise to make predictions on when electric cars will arrive in significant numbers.

Chips are created by etching wafers with intricate patterns of circuits and then applying layers of silicon until there is a desired thickness. This process is so delicate and time-consuming that any manufacturing difficulties will have ripple effects throughout the global economy. Prices for memory chips are set to rise as demand begins to exceed supply over the next few years.

Impact on the Auto Industry

The global chip shortage is the latest cause for concern in an already troubling trend of slowing electric vehicle production. The reports of a potential shortage come at a time when the automotive industry, and specifically manufacturers that specialize in electric vehicles, are already struggling to keep up with demand. One company that specializes in EV charging stations, ChargePoint, has reportedly had to put off its IPO as they wait for its supply of EV batteries to be filled. As a result of this unanticipated delay, investors are demanding more information about how and when the company will meet demands and prepare for future production delays. To combat these delays, electric vehicle manufacturers have been forced to turn away from conventional suppliers who have been unable to meet demand and look towards more niche suppliers who can produce smaller quantities.

Why This Is Happening

The electric vehicle revolution has been slowed by two things:

  • The number of charging stations
  • The availability of chips.

The shortage has been caused by an unprecedented demand for chips in other industries that have increased exponentially, such as data centers and AI, combined with a lack of investment in new facilities to produce them. In some cases, customers have had to wait up to three years for their electric vehicles, as automakers are forced to put projects on hold until the supply is stabilized.

How Long Will the Shortage Last?

The shortage of supply of central processing units or CPUs is so severe that it could delay the roll-out of electric vehicles for years. The shortage is largely due to a lack of foundry capacity, which is the ability to produce chips for other manufacturers and has arisen as a result of China's decision to invest heavily in its domestic semiconductor industry. There are also concerns about whether adequate supplies will be in place for demand from artificial intelligence (AI) and machine learning applications.

Central processing units are used in all sorts of electronic devices, including electric cars and artificial intelligence networks, pushing up demand.

What Can Be Done to Mitigate the Shortage?

The global chip shortage is both a blessing and a curse. While it forces automakers to push back their EV release dates, the tight supply has led to higher prices for these components which could in turn incentivize more companies to enter the market. One way to mitigate the shortage is to invest in more R&D so that there are more manufacturers capable of producing high-quality chips at competitive costs. In addition, ensuring that enough suppliers are capable of meeting demand can also help prevent potential delays.

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