EU Carmakers Face Shutdown as China Chip Ban Triggers Supply Crisis

Europe’s auto industry is on the brink of halting production as semiconductor shortages worsen following China’s export ban on Nexperia chips. The European Automobile Manufacturers’ Association (ACEA) has warned that major brands including BMW, Volkswagen, and Peugeot are operating on dwindling reserves, with assembly line stoppages “only days away.”
The crisis began after China blocked exports of Nexperia semiconductors earlier this month. The move came in response to the Dutch government’s decision to take control of the company and suspend its Chinese chief executive over governance concerns. As a result, around 70% of chips packaged in China are no longer reaching European plants.
Mercedes and other manufacturers are now searching for alternative chip sources globally, though experts warn it could take months to rebuild supply chains. ACEA’s director general, Sigrid de Vries, urged governments to seek an urgent diplomatic solution before Europe’s production lines grind to a halt.
Trade tensions between the EU, China, and the US have deepened, with Beijing also restricting rare earth exports vital for car electronics and magnet systems. A Chinese delegation is set to arrive in Brussels this week for talks aimed at easing the growing industrial strain.