It’s official: The battery crunch is the new chip shortage

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• Since the beginning of COVID, the chip shortage has plagued the auto industry. But a larger issue is now emerging.
• The electric vehicle battery shortage is starting to impact automakers.
• Ford's bottom line is affected by EV battery limitations and other factors.

The new shortage of chips is the battery crunch.

Experts say that the chip shortage still impacts vehicle supply. However, automakers now have to consider battery supply chains, which are a bigger obstacle. Legacy automakers are now facing challenges related to electric vehicle production, and the battery supply chains. This is affecting their bottom line.

Ford, GM and Porsche cited delays, restrictions and expenses related EVs and batteries in their recent financial results. They are not only falling short of their ambitious targets for electrification, but these issues also have an impact on their balance sheets.

Jim Farley, Ford's CEO, said in his company's most recent earnings call that "pricing has increased dramatically over the last 60 days" with regards to EVs. A large part of this is due to a price war between Tesla and Elon Mohs. Ford is unable to reduce its EV prices as easily as Tesla, mainly because the company has not yet reached the production scale that Tesla has. This is especially true when it comes batteries.

Ford expects to make a loss of $4,5 billion this year on EVs.

GM CEO Mary Barra also told investors that despite the company's goal of building 100,000 EVs by the second half 2023, a supplier is having delivery problems that are affecting GM’s battery module assembly.

Barra stated that "we have experienced unexpected delays on the ramp" — an indication that bottlenecks will come from the batteries side of the business. According to Electrek, GM halted production at a Canadian plant earlier this week due to battery shortages.

Executives at Porsche said that a better battery system is needed to hit this year's goal.

According to a Reuters article, CEO Oliver Blume said that "there is never a week when we don't have a supply chain problem".

The battery supply issue has been looming for a long time, but with automakers racing to grab EV market shares and spending billions on electrification, it is now becoming more evident. It wasn't always clear where the bottlenecks were.

Automakers are scrambling to meet the demands of the Inflation Reduction Act and other sourcing regulations.

The road to EVs will likely remain bumpy, despite the fact that auto companies have made agreements and signed partnerships to help reduce the impact of the supply chain.

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By: astjohn@insider.com (Alexa St. John)
Title: It’s official: The battery crunch is the new chip shortage
Sourced From: www.businessinsider.com/electric-vehicle-battery-crunch-new-chip-shortage-2023-7
Published Date: Mon, 31 Jul 2023 18:24:25 +0000

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