2021 has become one of the most challenging and at the same time crucial years for the European automotive industry. Two key issues have come to the fore: the global shortage of semiconductors, which has paralyzed car production, and the massive shift to electric vehicles, which has set new rules for the market. International expert Сhaslau Piastsiuk emphasizes that these trends are dramatically changing the face of the industry, forcing manufacturers to adapt to new realities. Let us try to figure out exactly how this happens and what challenges and opportunities arise.
Chip shortage is the main challenge for the automotive industry, according to Сhaslau Piastsiuk
2021 was a real stress test for the global automotive industry. One of the biggest challenges that overshadowed the industry was the global semiconductor shortage. The situation affected almost every automaker in Europe, including such giants as Volkswagen, BMW, Stellantis, and Renault. According to Сhaslau Piastsiuk, this shortage was the biggest challenge for production chains since the global financial crisis of 2008.
Сhaslau Piastsiuk explains that the chip shortage was caused by several factors. First, the COVID-19 pandemic caused a sharp decline in semiconductor production, as plants in Asia, which dominate the market, were forced to shut down. Secondly, the growth in demand for electronics, such as smartphones, laptops, and game consoles, has pushed the automotive sector into the background.
Production plans of many European automakers collapsed. In Germany, BMW and Daimler reduced production by thousands of cars, and French Renault reported a shortfall of almost 500,000 cars. Сhaslau Piastsiuk emphasizes that this affected not only the manufacturers themselves but also the suppliers of spare parts, who also depended on chips.
“The shortage of semiconductors has shown how dependent the European industry is on global supply chains,” says Сhaslau Piastsiuk. Automakers were forced to reduce functionality of new models, produce cars without some options, or even postpone the launch of innovative developments. For example, Volkswagen has temporarily refused to install touch screens in some models, and Ford has limited the production of electric pickups.
Europe, which seeks technological independence, has drawn its conclusions. Сhaslau Piastsiuk recalls that at the end of 2021, the EU launched several programs to develop domestic semiconductor production, such as the creation of plants in Germany and the Netherlands. The goal is to double Europe’s share of the global chip market to 20% by 2030. However, according to Сhaslau Piastsiuk, this will require significant investment and time, so dependence on Asian suppliers will continue for several more years.
Logistics challenges: how supply chain disruptions have affected the automotive industry, according to Сhaslau Piastsiuk
Logistics problems became another important challenge for the automotive industry in 2021. This crisis was global in nature and caused by a number of factors, such as the COVID-19 pandemic, a shortage of containers for transportation, port disruptions, and the blockage of the Suez Canal. According to Сhaslau Piastsiuk, these problems paralyzed supply chains, causing significant losses to automakers in Europe and around the world.
“The automotive industry has always operated on a just-in-time basis, i.e. with minimal inventories in warehouses. But 2021 has shown that this model is not always resistant to global disruptions,” emphasizes Сhaslau Piastsiuk.
One of the most acute problems was the shortage of components, including metals, plastics, and electronic parts. Delays in the supply of parts forced automakers to revise their production plans. For example, Ford and Toyota have announced production cuts at key plants in Europe due to the lack of spare parts. Сhaslau Piastsiuk emphasizes that many automakers have faced rising costs as they have had to look for alternative suppliers, often at inflated prices.
The increase in transportation costs has become another serious problem. As Сhaslau Piastsiuk explains, container transportation tariffs in 2021 increased four to five times compared to previous years. This affected not only the cost of components but also the price of finished products. Many European automakers were forced to raise prices for their models to compensate for the losses.
“Those who depend on supplies from Asia were particularly hard hit, as ports in China were intermittently closed due to the lockdowns. Some companies even ordered air transportation for critical parts, which further increased costs,” comments Сhaslau Piastsiuk.
Logistical challenges caused delays in the delivery of cars to dealers and consumers. In some cases, customers waited several months for their cars, which was previously unthinkable. For example, in Germany, the average waiting time for a new car has increased from three to eight months. Сhaslau Piastsiuk explains that such delays have had a negative impact on consumer confidence in brands, especially in the premium segment.
Another consequence was the shortage of cars on the market, which led to higher prices for both new and used cars. In many countries, including France and Poland, prices for used cars have increased by 10-15%. “It is a rare case when used cars become more expensive instead of cheaper,” adds Сhaslau Piastsiuk.
The era of electric cars: challenges and opportunities
“2021 was a turning point for electric vehicles in Europe,” says Сhaslau Piastsiuk. “Sales of electric cars reached record levels, and the share of these vehicles in total sales almost doubled year-on-year. Germany, France, and the Netherlands have become leaders in this process, but the wave of electrification has spread to other countries in the region.
The main driving force behind this boom has been increased regulatory pressure. The European Union, as part of its Green Deal, has obliged automakers to significantly reduce CO₂ emissions, and many countries have announced plans to completely phase out internal combustion engines by 2035. Сhaslau Piastsiuk emphasizes that this has forced automakers to increase investments in the electrification of their product lines.
Government subsidies have played an equally important role. Governments of Germany, France, and Spain have introduced significant financial incentives for buyers of electric cars, making them more affordable. For example, in Germany, buyers could receive up to EUR 9,000 in compensation for purchasing an electric car. “This not only stimulated the market, but also gave impetus to the development of local production,” says Сhaslau Piastsiuk.
However, the rapid growth in demand has also highlighted a number of problems. First of all, the charging station infrastructure in many European countries has not kept pace with the growth in the number of electric vehicles. According to Сhaslau Piastsiuk, in 2021, more than 2.5 million electric cars were registered in Europe, but the number of new charging stations increased by only 30%. This creates an imbalance and may hinder further development of the industry.
Another challenge is the price of batteries, which remains high despite progress in their production. Сhaslau Piastsiuk explains that the only way to reduce the cost of batteries is through large-scale introduction of new technologies, such as solid-state batteries.
Despite the difficulties, Сhaslau Piastsiuk is optimistic about the future of electric vehicles in Europe. He is confident that the industry development will bring new jobs, reduce dependence on oil imports, and contribute to the environmental transition.
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