VW expects further losses from chip shortage

German automaker VW has revealed it expects further losses attributed to the global semiconductor shortage that has severely affected electronics and automotive industries in the wake of the pandemic.

Wayne Griffiths, the president of VW's Spanish brand has warned of "considerable challenges" in the second quarter, according to an interview he gave to the FT.

Read more: The scramble to end the semiconductor shortage

Chip manufacturers are currently withholding supply to automakers in order to allow electronics manufacturers - who have seen a boom with the rise of remote working and government furlough schemes - to meet their significant demand increases over the past year.

VW has already announced a slashing to its production of around 100,000 vehicles and was also forced to cut 4,000 jobs in Germany via an early retirement scheme.

The automaker has also been seeking to claim damages from its suppliers over the bottlenecks and losses attributed to the crisis.

Griffiths told the FT: “We are being told from the suppliers and within the Volkswagen Group that we need to face considerable challenges in the second quarter, probably more challenging than the first quarter."

The company has warned it does not have the factory capacity to recoup its lost output from the pandemic.

He added the chip shortage was the "biggest challenge" the company is facing at the moment.

He described the situation of the automaker's plant in Barcelona as being "hand-to-mouth," with it only deciding which brands to build after receiving chips from suppliers.

He said: "The name of the game this year will be flexibility. We have to try to build when we get [chips] available."

The company is currently switching between hybrid and traditional models when shipments come in. This may be severely affecting its ability to fully shift to electric vehicles, which the company previously laid out at a press conference.

Read more: VW set to "accelerate" shift to electric vehicles

It is currently unknown what the automaker's progression is regarding its "Acceleration" scheme, which will attempt to see the company releasing a new EV brand every year until 2030.

With a number of European nations, most notably the UK and Portugal, pledging to ban the sale of full-electric vehicles, it is only a matter of time before the chip shortage severely affects automaker's ability to adapt.

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