A looming lack of electrical steel could compound an ongoing component shortage faced by carmakers and lead to longer delivery delays for electric vehicles (EVs).
EV buyers globally could be looking at an average waiting time of more than two months for their cars as a result of component shortages that have disrupted production, said Mr Matteo Fini, an automotive supply chain expert at market intelligence firm IHS Markit.
The shortage of electrical steel, which is used to make the cores of motors, is due to the lack of global manufacturing capacity and competition from other users such as power generation companies and makers of consumer goods such as vacuum cleaners and hair dryers.
This is coming to the fore at a time when carmakers are already struggling with a shortage of chips and semiconductors. Logistics bottlenecks in supply chains mean the waiting time for some chips has more than doubled to 26 weeks since the pandemic, Mr Fini said on Wednesday.
"All this affects the roll-out of EVs. In both electrical steel and semiconductor chips, there is a structural deficit. We might get by 2022 but beyond that, there is a significant deficit that will require investments in capacity that will take time to build."
Mr Fini noted that there is between US$60 (S$82) and US$200 worth of electrical steel in an EV, adding that two-thirds of production take place in China and South Korea. "There are only 20 sites that can produce this on a global basis, with no capacity in North America."
Consequently, EV makers have had to make trade-offs in manufacturing, such as forgoing certain models or doing away with some model features, which is expected to continue beyond next year, Mr Fini said.
The persistent shortages of components is also coming at a time when carmakers are committing to producing more EVs. Ford Motor wants to increase its production capacity to 600,000 units globally by 2023, while rival General Motors plans to sell one million EVs by 2025.
Last week, Nissan Motor announced that it will invest two trillion yen (S$24.1 billion) over the next five years to electrify more of its models. By 2030, the Japanese carmaker will introduce 15 new EVs and aim for more than half of its sales to be electrified by then, the company said.
In Singapore, there were 2,309 EVs on the road as at Oct 31, up 89 per cent since the start of the year, according to Land Transport Authority data.
