European auto manufacturers are calling for a ramp-up in localised semiconductor production to help existing and future auto demand, as well as climate ambitions, Kallanish reports.

Eric-Mark Huitema, director general of the European Automobile Manufacturers’ Association (ACEA), said on Wednesday the “acute and severe” chip shortage crisis must be addressed now to support the e-mobility shift.

The high demand, dramatic shortage and rising prices of microchips are having a “profound impact on consumer choice and the affordability of new vehicles,” he says. “This slowdown in the renewal of the EU vehicle fleet also puts Europe’s climate ambitions at risk.”

ACEA believes that besides an increase in European production of chips as small as 2 nanometres, boosting the availability of slightly bigger 14-28 nm microchips will remain a priority for the auto industry, as these are widely used its members. Microchips that are 7 nm and smaller are already being used for some very specific automotive applications, but development in artificial intelligence and advanced displays will greatly increase the auto industry demand.

Microchips are crucial for many important systems and the functioning of modern vehicles, particularly electrified powertrains. The semiconductors are used in electric motors, systems to reduce emissions, active safety features, driver assistance systems, automated and autonomous driving functions and connectivity services. The smarter the vehicle gets, more chips it will demand.

Huitema doesn’t see the global supply crunch going away anytime soon, putting further pressure on the auto industry’s recovery. He warns the problem also highlights the “extremely vulnerable” supply chain for European manufacturers, calling the European Union to act on its “tech sovereignty.”

“As we work towards a new era of mobility and a carbon-neutral EU, the success of this transformation remains uncertain as long as we don’t have access to enough chips,” he concludes.