Nio, Stellantis, and GM reduce car production due to global chip shortage

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The current global semiconductor shortage is forcing many car manufacturers to slow or temporarily halt their production lines.

Nio, Stellantis, and General Motors recently announced plans to temporarily suspend operations at some of their auto plants because of the global chip shortage.

In addition, Renesas Electronics revealed a fire at its Naka, Japan component factory had a bigger impact than initially believed.

The worldwide semiconductor shortfall, which began late last year, has caused many leading vehicle manufacturers to reduce their output.

Nio Becomes First Big Chinese Carmaker to Shutdown Car Assembly Center

Nio stated it would close its Hefei, China-based auto plant for five business days starting on March 29. The corporation revised its first-quarter production estimate down by 500 to 1,000 vehicles because of the temporary facility closure. Earlier this month, CEO William Li revealed the company’s output had fallen from 10,000 units per month to 7,500 due to the chip shortage.

Since its first offerings went on sale in 2018, Nio has sold nearly 82,000 automobiles.

The popularity of its premium SUVs in the world’s largest car market led to its stock price rising 1,100 percent in 2020. But its use of cutting-edge chips from foreign providers made it vulnerable to the component shortage. By comparison, its contemporary, BYD, has kept its assembly lines running because it makes its own semiconductors.

Stellantis Ceases Operations at Five North American Plants

Auto conglomerate Stellantis stated it would close five of its plants in North America due to insufficient chip supplies.

The firm will shutter its facilities in Illinois, Michigan, Mexico, and two complexes in Canada until mid or late April. The temporary work stoppages will reduce its output of older model Ram 1500 trucks and Jeep Cherokee and Compass SUVs. Its production of Chrysler 300 sedans, Pacifica and Voyager minivans, and Dodge Challenger and Chargers will also be affected.

In February, Stellantis idled five of its plants in Europe and Canada because of the semiconductor scarcity. The corporation has sought to stabilize its assembly work by securing new component suppliers. But CEO Carlos Tavares expressed doubt that the chip crunch would be resolved this year.

GM Halts Production of Midsized Trucks at Missouri Plant

GM is halting production of its Chevrolet Colorado and GMC Canyon midsized trucks at its Missouri site until April 5. The corporation also said it would keep its Lansing Grand River factory off-line until the week of April 12. It ordered the center shut down on March 15 as a result of automotive part constraints.

Prior to its mandated downtime, the plant fabricated Chevrolet Camaro cars and Cadillac CT4 and CT5 luxury sedans.

America’s largest automotive manufacturer suspended work at four of its factories across the Americas until April earlier this month. The firm has also been running its South Korean facility and half capacity since mid-February amid the worsening chip shortage.

Component Factory Fire Bigger Impact Than Initially Believed

Finally, Renesas announced that the blaze at its Naka component complex in mid-March was more destructive than initially thought.

The firm previously stated the fire destroyed 11 machines it utilized in its 300mm silicon wafer production line. However, the company determined soot contamination rendered an additional 6 tools inoperative.

Renesas noted it would transfer two-thirds of the facility’s workload to other plants and intended to restart its 300mm fabrication within a month. As of this writing, it has not publically offered a revision to that plan.

Regardless, disruption of the corporation’s factory will likely exacerbate the impact of the global chip crisis. Reuters estimated the firm is responsible for making around 30 percent of the world’s automotive microcontrollers. That means the Naka fab downtime could curtail the output of its biggest clients, including Nissan, Toyota, Honda, and Volkswagen.

In early 2021, many auto industry observers predicted the sector would recover from the global semiconductor by midyear. However, Renesas’ recent production challenges indicate part quantities will not return to normal seasonal levels in Q2. Right now, the severe imbalance between supply and demand that sparked the component shortfall probably will not be resolved until 2022.

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