Chip Shortage Leaves Tesla And Other Electric Car Buyers in China Waiting Months For New Vehicles

Assemblers and component makers struggle to keep up with demand, automobile purchasers in China have been waiting several months for freshly acquired vehicles due to a global chip shortage.

Electric vehicles (EVs) have been affected particularly severely since they require more chips than regular carmakers. Despite a downturn in manufacturing, premium automobiles that require more chips for driver assistance and other electronic systems remain in great demand.

Buyers buying Shanghai-made Model 3 and Model Y automobiles would not receive their new cars until the end of the first quarter, according to two Tesla sales managers.

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"A big stumbling block to sales development ahead of the Lunar New Year is an insufficient supply of chips," said Tian Maowei, a manager of Yiyou Auto Service in Shanghai. "Some consumers have expressed dissatisfaction with the length of time it takes for delivery to arrive."

After a difficult year in 2021, supply issues are still plaguing the car sector. According to AutoForecast Solutions, which gathers industry output estimates, a chip shortage led Chinese automakers to cut production by more than 1 million cars last year. According to the firm, the chip shortage has resulted in 11 million fewer automobiles being produced globally.

Smaller assemblers are expected to be forced to halt production this year due to the chip scarcity, according to analysts.

According to the China Passenger Car Association, worldwide foundries can only create enough semiconductors, microcontrollers, and high-end chips with artificial intelligence (AI) processors for around 4 million new energy vehicles (NEVs) in mainland China, the world's largest automotive market (CPCA). Based on the guild's prediction for NEV demand this year, a term used in China to designate electric and hybrid cars, there would be a 1 million vehicle deficit.

"A shortage affects not just manufacturing output, but also delivery times," said Chen Jinzhu, CEO of Shanghai Mingliang Auto Service, a car repair and insurance firm. "Scarcity issues affect nearly all luxury versions of major automobile manufacturers, from Volkswagen to BMW."

According to Eric Han, a senior manager at Shanghai-based business advice firm Suolei, buyers of such automobiles will have to wait at least a month for delivery.

The worldwide auto chip supply chain, according to William Li, CEO of Shanghai-based Nio, one of the three biggest mainland EV start-ups, is still vulnerable to any breakout of Covid-19, which might trigger a production halt.

"I believe the chip scarcity difficulties will be alleviated in the second half of 2022 when additional capacity is introduced," he said at a press conference on December 19.

According to research released this month by Susquehanna Financial Group, semiconductor lead time, or the period between when a product is ordered and when it delivers, was still climbing as of last month. In December, it grew to 25.8 weeks, six days longer than the previous month.

Despite supply bottlenecks, the CPCA estimates that passenger car sales in China would climb 4.1 percent year on year to 20.09 million units in 2021. The data gathering and analysis for the entire year has not yet been completed.

The year-on-year increase, aided by a rising NEV penetration rate, would put a stop to a three-year losing skid from 2018 to 2020.

Rapid development in chip-hungry NEVs from companies like Tesla and Nio, on the other hand, might exacerbate the semiconductor scarcity by driving demand even higher.