2024-01-15 16:39:08
The semiconductor crisis has already strained the automotive sector and now a new crisis is looming.
The year 2024 is off to a flying start for the automotive sector, but not in a good way. The Red Sea, a geopolitical hot spot, has triggered a crisis that is hitting automotive groups hard, including Tesla and Volvo (of the Chinese group Geely). They had to pause a good part of their production in Europe. The problem? They are short of components due to attacks on ships sailing that way.
Tensions in the Yemen region
Indeed, tensions in the Yemen region, exacerbated by Iran’s support for the Houthi militia, have contributed to growing instability. This situation is all the more complex as it is part of a broader conflict involving Israel and Hamas. All this is disrupting one of the most important maritime routes in the world. This route is a bit like the highway of commerce for the auto and electronics industry, with 12% of global container traffic passing through it.
Recently, the United States and the United Kingdom have responded with counterattacks, to stabilize the region and secure maritime routes essential to the global economy. Meanwhile, the United Nations Security Council has adopted a resolution demanding an immediate end to attacks on merchant and commercial ships.
In this context, several shipping giants such as Maersk and Hapag-Lloyd have opted for alternative routes, bypassing Africa. Although these journeys are safer, they add up to 10 days of travel time and result in significantly higher fuel costs.
Reduced production in European factories
Faced with these challenges, Tesla announced Archyde.com that it was going to reduce its production at the Berlin factory from January 29 to February 11, affecting the production of the Model Y. For its part, Volvo shut down its Ghent (Belgium) factory for a few days, where the C40 models are assembled and XC40, but also soon the EX30.
For the moment, other manufacturers such as Stellantis, Volkswagen, BMW or Renault are not affected. Stellantis (which notably owns Peugeot, Citroën, Fiat and Jeep) nevertheless had to turn to air transport to be able to be delivered.
It is important to remember that these automotive groups rely heavily on Asia, particularly China, for their electric car components. Moreover, China represents 67% of European imports of battery components for electric vehicles, and a large part of lithium-ion batteries. These figures, from S&P Market Intelligence, show the extent to which Europe is dependent and could quickly feel the effects of these disruptions. Volvo and Tesla are therefore undoubtedly the first to talk about it, but other car manufacturers are affected by the current crisis in the Red Sea.
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