It’s official: The battery crunch is the new chip shortage

• The chip shortage has ailed the auto industry since early in COVID, but a bigger issue is surfacing.
• Automakers are starting to see the impacts of the electric vehicle battery crunch.
• EV battery constraints and more are affecting the bottom lines of companies like Ford.

It’s official: The battery crunch is the new chip shortage.

The chip shortage is still impacting vehicle supply, experts say, but automakers are now having to reckon with the battery supply chains as an even bigger headwind. Challenges surrounding electric vehicle production and the battery supply chain are finally materializing for legacy automakers and impacting their bottom lines.

Ford, GM, and Porsche pointed to delays, constraints, and expenses related to EVs and their batteries in recent financial results. These issues are not only causing them to fall short of their ambitious electrification targets but also impacting their balance sheets. 

Ford CEO Jim Farley said during the company’s last earnings call that with regard to EVs, “pricing pressure has dramatically increased in the past 60 days.” Much of that stems from an EV price war brought on by Tesla and Elon Musk. One of the biggest reasons it’s more difficult for a company like Ford to lower its EVs prices is because it hasn’t yet hit production scale in the same way Tesla has, especially when it comes to batteries, which would bring down overall costs. 

Ford expects to lose $4.5 billion on EVs this year.

Meanwhile, GM CEO Mary Barra told investors that while the company is targeting building 100,000 EVs in the second half of 2023, one of its equipment suppliers is experiencing delivery issues that is constraining GM’s battery module assembly.

“We have experienced unexpected delays in the ramp,” Barra said — an indicator that bottlenecks are to come from the battery side of the business. Battery shortages were blamed for GM halting production at a Canadian manufacturing plant earlier this month, according to Electrek.   

And at Porsche, hitting this year’s target will require a better battery situation, executives said.

“There is no week where we have no supply chain issue,” CEO Oliver Blume told media, per a Reuters report. 

Battery supply issues have long been looming, but as auto companies across the globe race to snatch up EV market share and spend billions to electrify, the challenges have manifested quickly. Before, it wasn’t as obvious just exactly where hold-ups would come into play. 

Now, combined with sourcing requirements like those in the Inflation Reduction Act, and a mash dash for raw materials, processing power, and manufacturing capability has automakers scrambling. 

Competition is fierce, and while auto companies are making agreements and signing onto partnerships to reduce the blow from the supply chain, the road to EVs is likely to remain rocky.