The global chip shortage could be accelerating the shift to electric vehicles, a leading European auto analyst says, as carmakers increase EV production to account for a change in product mix.
And, it could also spell the end of days when cars are churned out to fill dealer floors before being flogged off by predatory pricing tactics.
In his latest analysis, leading auto analyst Matthias Schmidt outlines how legacy carmakers in Europe that are faced with a shortage of semiconductors are opting to push out premium vehicles with larger profit margins in order to balance books.
In Europe, there are strict limits around the amount of climate-change inducing emissions from the vehicles a car maker sells each year. In 2021, it was reduced to just 95gm/CO2 per kilometre. Carmakers that miss the mark face huge fines, as VW found out in 2020 after its ID.3 launch was delayed.
But larger and premium vehicles – referred to as “overweight luxo-barges” by Schmidt – have a typically corpulent emissions profile, so much so that in the past luxury brands such as Ferrari and Lambhorgini, among others, have sought waivers from the EU restrictions.
This is causing carmakers to offset the increased emissions from luxury vehicles with more plug-in electric vehicles, says Schmidt, because although the latter have a much smaller and at times non-existent profit margin, they will help reach those carbon targets.
“With tough fleet average EU CO2 emissions targets on the table, car manufacturers are having to balance their ‘carbon books’ and are increasing PEV sales mixes, with Germany and France both recording new penetration highs in August in order to compensate for those overweight luxobarges, that are as quick to turn heads as they are profits,” says Schmidt.
The strict emissions policy, which contrasts starkly with Australia, where there are no regulated limits for vehicle emissions, only a voluntary one instigated by the Federal Chamber of Automotive Industries, means that Europe is hitting new highs in terms of electric vehicle sales.
Figures compiled by Schmidt show that in August, almost one in four cars sold was plug-in electric. Year-to-date figures show that almost two in five cars sold are plug-in electric, with an almost equal split between battery-electric and plug-in hybrids.
The other side of the global chip shortage coin, Schmidt says, is it could see less cars made unless they have been ordered by customers.
Tesla, the leading electric car maker, pioneered online and made-to-order car manufacturing. Other carmakers and EV startups are following the lead – think Mercedes-Benz, which is selling its EQC and EQA online in Australia, and Honda, which on Tuesday become the first Japanese carmaker to start selling online.
Polestar, which launched in Australia on Friday, will also sell online, and use a similar showroom-style setup to Tesla.
Schmidt thinks the shortage will mean legacy carmakers will have to rethink how they produce vehicles at volume, moving away from the prioritising at-scale manufacturing to reduces production costs.
“While traditional OEMs were already altering their mantra up to 2025 to profit is the new volume – before scaling up to achieve economies of scale in the new EV world, post-2025 – few could have expected the severity of this downscaling of traditional high volume models, multiplied by the supply-side issue.
“If the chip issue doesn’t solve itself soon we could well see the premature demise of high volume, pile ’em high, sell ’em cheap ICE models earlier than expected,” he says.
Bridie Schmidt is lead reporter for The Driven, sister site of Renew Economy. She has been writing about electric vehicles since 2018, and has a keen interest in the role that zero-emissions transport has to play in sustainability. She has participated in podcasts such as Download This Show with Marc Fennell and Shirtloads of Science with Karl Kruszelnicki and is co-organiser of the Northern Rivers Electric Vehicle Forum. Bridie also owns a Tesla Model 3 and has it available for hire on evee.com.au.