Europe’s carmakers face growing competition from AI for vital supplies
Europe's car industry is most at risk from its reliance on a handful of countries for chips and critical materials, according to a new report which warns that going electric is pitting automakers against AI and data centres for the same supplies.
The European car industry is facing mounting risks from a reliance on a limited number of countries, suppliers, and processing centers for crucial components. A recent study, commissioned by the European Automobile Manufacturers Association (ACEA), highlights these vulnerabilities. The key findings focus on ten essential materials, with concentration of supply being the most significant risk, scoring 4.6 out of 5.
Semiconductor chips, silicon, tungsten, neodymium-iron-boron magnets, and wiring harnesses emerged as the most vulnerable inputs.
The study reveals that the most hazardous stage for these materials is refining and processing rather than extraction. China remains the dominant player in refining rare-earth elements and magnet production, alongside manufacturing gallium and germanium. Taiwan and South Korea also play significant roles in chip manufacturing. Europe's primary challenge lies not just in accessing raw materials but also in shortages of processing capacity, qualified suppliers, and specialized expertise.
With the rise of electric vehicles and artificial intelligence, carmakers are increasingly competing with other sectors like AI, data centers, defense, and clean energy for the same resources. This shift could increase industry competition by approximately 15%. Price increases for critical materials, such as gallium, which has surged over 11-fold since 2016, are also a concern.
Carmakers, often small customers in these markets, now face heightened competition for supply. For example, Volkswagen's partnership with Uber to deploy autonomous, electric microvans and Stellantis' plans to produce robotaxis for Uber using Nvidia's self-driving technology underline the industry's growing reliance on scarce resources.
The study outlines four potential disruption scenarios, including electronics supply interruptions from Taiwan, resource nationalism in Asia, strained trade routes in the Americas, and instability along mineral export routes in Africa.
While full self-sufficiency is deemed unrealistic, the study emphasizes the need for immediate action. Europe must expedite permitting and qualification processes, prioritize investments in critical bottleneck areas, diversify suppliers and logistics routes, enhance supply chain monitoring, and provide private investors with long-term demand certainty. The study concludes that addressing these issues is imperative not just for risk management but for preserving Europe's industrial strength.
Written by urgent.news from Euronews Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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