EU carmakers 鈥榙ays away鈥 from shutdown as China chip ban bites
October 30, 2025 by Siobhan Doyle
Car changing is a big deal
European carmarkers such as BMW, Volkswagen and Mercedes warn they could be forced to halt production within days after China blocks exports of Nexperia semiconductors.
A new global chip crisis is brewing 鈥 and the UK car industry could soon find itself back in the firing line. That鈥檚 because China has banned exports of semiconductors made by Nexperia, a Dutch chipmaker that plays an important role in vehicle electronics.
Because of this, European carmakers including BMW, Mercedes, and Volkswagen have warned that they are just days away from halting production as supplies run out.
The European Automobile Manufacturers鈥 Association (ACEA), whose members include Fiat and Peugeot, said factories were running out of reserve stocks of chips, and those supplies are 鈥渄windling.鈥
鈥淎ssembly line stoppages might only be days away,鈥 said ACEA鈥檚 director general Sigrid de Vries. She urges governments to find a diplomatic solution before production grinds to a halt.
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What鈥檚 going on?
The Chinese government imposed the Nexperia export ban at the start of October after the Dutch government took control of the Netherlands-based firm and suspended its Chinese chief executive. It cited national security concerns that were flagged by the US.
This move has escalated a growing trade dispute between China, Europe, and the US, which was already ignited by new restrictions on rare earth exports set out by China鈥檚 president Xi Jinping.
Xi and US President Donald Trump are expected to sign off on a trade agreement on rare earth exports today (30 October). The proposed deal would pause the export ban on crucial minerals for a year. Though it鈥檚 unclear whether this will also cover deliveries to the EU.
Rare earths are important for the car industry as they are used in their windows, door and boot openings. Meanwhile, semiconductors are key for all electronics found in cars, ranging from dashboard functions to ignition and transmission systems.
The ripple effects of these supply issues are being felt worldwide. Mercedes boss Ola K盲llenius said the company is 鈥渟earching globally鈥 for new semiconductor suppliers, while Nissan鈥檚 chief performance officer, Guillaume Cartier, admitted that production in Japan is only secure 鈥渢o the first week of November.鈥
But why are semiconductor chips so important?
Microchips, or semiconductors, are the brains behind everything electronic in a modern car: from infotainment systems to safety sensors and electric drivetrains. They鈥檙e also used in many safety features such as anti-lock braking systems and in airbags. The average petrol car uses around 1,000 chips; for electric cars, it can be double that.
With the UK car industry focusing on electrification, the stakes are higher than ever. 鈥淎 single missing chip can stop an entire production line,鈥 says Professor David Bailey, automotive expert at the University of Birmingham. 鈥淵ou can鈥檛 just swap suppliers 鈥 every component has to be rigorously tested for safety and compatibility.鈥
鈥淎ny disruption to chip supply now affects the very core of the UK鈥檚 green transition,鈥 Mike Hawes, chief executive at Society of Motor Manufacturers and Traders (SMMT), added. 鈥淲ithout a resilient semiconductor strategy, we risk slowing down EV adoption and investment.鈥
Can UK carmakers weather the storm of a chip shortage?
For the UK car industry, the warnings are a worrying d茅j脿 vu. Manufacturers are still recovering from the 2021 chip shortage, which, amplified by the Covid pandemic鈥檚 impact on global supply chains, brought assembly lines to a halt and left buyers waiting months for new cars.
A spokesperson at SMMT told 莲花直播: 鈥淎nother semiconductor chip shortage is the last thing the global automotive industry needs. While the sector has made efforts to diversify its supply chains, if not resolved quickly this issue has the potential to severely disrupt vehicle production and market supply.
鈥淪MMT is actively monitoring the situation and is in contact with members and government to understand the scale of any impact and measures that might be taken to mitigate it.鈥
Now, experts say British manufacturers need to move quickly 鈥 strengthening supply chains, improving forecasting, and investing in homegrown semiconductor capacity 鈥 to avoid history repeating itself.
Now, experts say British manufacturers need to move quickly 鈥 strengthening supply chains, improving forecasting, and investing in homegrown semiconductor capacity 鈥 to avoid history repeating itself.
What can British car manufacturers do?
While much of the semiconductor supply chain sits beyond the UK鈥檚 borders, carmakers here aren鈥檛 powerless. Here are several ways British brands can protect themselves, and their customers, from the next chip crunch:
1. Build stronger relationships with suppliers
Manufacturers can no longer afford to rely solely on 鈥渏ust-in-time鈥 logistics, where parts arrive exactly when needed. By forging closer ties with chipmakers and maintaining modest reserves of critical components, UK brands can give themselves a small but crucial buffer.
2. Invest in smarter forecasting
Advances in data analytics can help predict demand spikes before they happen. 鈥淏y using AI and real-time monitoring, car companies can spot supply risks early, and act before they cause production delays,鈥 says Bailey.
3. Diversify sources
Relying on just one or two suppliers has proven risky. For example, smaller companies dependent on Jaguar Land Rover were severely affected when one of its third-party providers suffered a major cyber attack 鈥 a disruption unrelated to the chip shortage but shows just how fragile supply chains can be. To reduce vulnerability, UK manufacturers can work with multiple chip producers, including emerging European and Japanese suppliers, to spread the risk
4. Push for local production
The government鈥檚 拢1bn semiconductor strategy is a start, but some experts say the UK needs to go further. Incentives for domestic chip assembly and testing plants could make supply chains more resilient, especially for electric car components.
5. Keep customers informed
Transparency goes a long way. Clear communication about delivery timelines, component shortages, and alternative models can help maintain customer trust, even during disruptions.
What it means for drivers
If the Nexperia crisis deepens, buyers could see longer wait times for new models, particularly for electric cars which are most reliant on advanced chips.
There鈥檚 also the risk that another global shortage will leave UK manufacturers scrambling for supply. Companies such as Nissan in Sunderland and Stellantis in Ellesmere Port could face production delays, while suppliers 鈥 already operating on tight budgets 鈥 might need costly fixes or even temporary shutdowns. As a result, customers may experience longer waiting times for new cars.
In the longer term, the looming crisis could highlight areas where the UK car industry needs to become more resilient. Closer partnerships between manufacturers, suppliers, and government may help reduce the impact of future supply disruptions.
For UK drivers, this could mean shorter waiting times for new cars and a more dependable supply of vehicles in the years ahead.
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