Commerce Secretary: Chip Shortage Threatens Biden EV Plans

Commerce Secretary Gina Raimondo built support for a congressional bill to take on China and said yesterday that automakers’ big plans for electric vehicles are being jeopardized by the ongoing shortage of computer semiconductors.

“The average electric vehicle has about 2,000 chips, about double the average number of chips in a non-electric car,” Raimondo said in prepared comments to the Detroit Economic Club, a nonprofit business group based in the Michigan auto hub.

“While companies like Ford and GM vie for a foothold in the electric vehicle market, we know that innovation in the US battery market will be stifled if we don’t invest in domestic semiconductor innovation at the same time,” Raimondo said.

Before the speech, Raimondo also told reporters that Biden’s plans to make half of its new vehicles electric by 2030 depend on US investment in semiconductor manufacturing. “It’s necessary for our US economic competitiveness, it’s necessary if we’re going to meet our climate goals, and it’s necessary to create jobs,” she said. The Detroit News.

The secretary’s visit to Michigan was intended to mobilize support for a $52 billion legislative package to revitalize the US semiconductor industry.

The “Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act,” or “CHIPS for America Act,” was passed by the Senate in June as part of a larger bill but failed to receive a vote in the House of Representatives.

The world’s semiconductors are mainly made in Asia, especially China and Taiwan. As pandemic lockdowns eased and the economy bounced back to life, automakers grew frustrated in their efforts to meet pent-up demand for cars. Semiconductor companies prioritized electronics companies, not automakers, because of their limited supply. As a result, almost every automaker has faced chip-related delays and shutdowns.

The shortages have already put several high-profile EVs on the brakes.

In August, Ford Motor Co. customers that a lack of chips would delay delivery of its flagship EV, the Mustang Mach-E, for several weeks, and General Motors Co. temporarily closed the Detroit factory where it makes the Bolt EV. Also this summer, Rivian Automotive Inc., the electric truck maker, cited semiconductors as the reason for a slowdown, and output remains very sluggish.

A spokesman for the Commerce Department said the figure quoted by Raimondo – that an electric car has twice as many chips as a traditional car – comes from talks with car manufacturers. “We think it’s a reasonable average,” said the spokesperson.

A recent study by IDTechEx, a UK-based consultancy, estimated that an EV needs more than twice as many semiconductors as its combustion engine counterpart, especially since the EV uses much more power electronics.

One analyst said Raimondo is right that EVs need more semiconductors, but didn’t necessarily agree that this means electric vehicles are particularly vulnerable to a shortage of them.

“EVs, especially those designed on EV-only platforms, generally have more electronic content and thus require more chips,” said Alan Baum, a Michigan auto forecaster who studies electric vehicles.

However, he added: “The design of EVs is important and… a clean sheet approach, such as Tesla, or even new platforms from GM, Ford and VW will allow for more capacity and more efficient use of chips.”

Tesla Inc., the electric car maker, has had fewer chip-related manufacturing problems. Baum said Tesla’s design requires fewer chips because it “centralized the computer in one place in the car, rather than spreading the computer across the various vehicle systems.”

Tesla’s rivals have taken action against chip shortages by including themselves in the supply chain. Earlier this month, Ford signed an agreement with maker GlobalFoundries to make chips, and GM said it would partner with Qualcomm Inc. and NXP Semiconductors NV in a similar agreement.

This story also appears in Climate wire.