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Chip shortage temporarily puts the brakes on electrification

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The world is running on microchips: from your electric toothbrush to your smartphone to just about all the systems in your car. There is a general shortage currently and that appears to be a problem mainly for electrically powered cars.

It has received extensive press coverage in recent weeks: car manufacturers are having to temporarily scale back or even halt production due to a shortage of parts. It is the semiconductor chips in particular that are in short supply. Industry analysts predict that the shortage will result in at least 700,000 fewer cars rolling off the global production line this year.

There are many reasons for the chip crisis. According to some sources, suppliers in the automotive industry have been keeping their stocks low, assuming that car sales would continue to dwindle for a while. But in the meantime sales have picked back up again. 

In addition, the modern car’s demand for microchips is constantly increasing, not least when it comes to electric or plug-in hybrid cars. It stands to reason with their on-board battery management system and charging electronics. They also need wallboxes and charging cables and – you guessed it – these simply don’t work without electronics. In other words, electric cars have taken a double hit. 

This situation could continue for several more months, but there is light at the end of the tunnel. In addition, we can look forward to favourable economic factors and an electric car purchase price that will rival that of the classic car by 2023.

Lower battery prices, more favourable TCO

The scarcity of certain raw materials leads to price inflation. This could negatively affect the economic recovery, but analysts still agree that growth will resume from the second quarter of this year.

The economy will also be the driving force behind the switch to electric cars. According to Bloomberg NEF, the prices of propulsion batteries will fall even faster than initially predicted. Last year the cost price per kWh decreased to an average of $137 (based on a survey of 150 suppliers and customers). Ten years ago, the average kWh price was still $1,100.

The tipping point for driving down the production price of an electric car to the level of a regular combustion engine car stands at $100, according to Bloomberg NEF. It is expected that this tipping point will be reached by 2023.

This is just two years away. And with it, the Total Cost of Ownership (TCO) of battery-electric cars will – even without subsidisation – dip below that of petrol and diesel cars. Incidentally, the latter are becoming more and more expensive to produce, due to stricter emission standards, and are simultaneously facing increasing taxation.

It is therefore wise to keep a finger on the pulse and always look at the bigger picture. Athlon can of course help you with that.

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