Semiconductor Shortage Could Result in 1.3 Million Fewer Vehicles in 2021

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【Summary】The semiconductor shortage brought on by the COVID-19 pandemic is greatly affecting the number of vehicles automakers will be able to manufacture this year.

Original Vineeth Joel Patel    May 17, 2021 7:30 AM PT
Semiconductor Shortage Could Result in 1.3 Million Fewer Vehicles in 2021

Automakers are currently facing a global semiconductor shortage. Because of the COVID-19 pandemic, demand for smartphones, gaming devices, and computers is at an all-time high. Since these devices account for the largest demand for semiconductor chips, they received preferential treatment and the lion's share of available chips when the pandemic started last year. 

Unfortunately, that left automakers high and dry, forcing them to close plants, limit the production of certain vehicles, and discontinue features. Now, automakers are claiming that the shortage is going to massively affect total production this year.

Production Greatly Affected

According to the Detroit Free Press, the Alliance for Auto Innovation stated that the shortage could result in 1.28 million fewer vehicles being manufactured in the U.S. in 2021. In a recent survey that was completed by automakers and suppliers conducted by the Alliance for Auto Innovation, the shortage could hurt production for another six months.

"The chip shortage has forced a number of automakers to halt production and cancel shifts in the United States, with serious consequences for their workers and the communities in which they operate," wrote John Bozzella, the Alliance for Auto Innovation's president and CEO.

To fix the issue, Bozzella is urging that some portion of funding go toward boosting the domestic production of semiconductors for use in vehicles, claims the outlet. "This could be accomplished by, for example, specifying that a particular percentage — that is reasonably based on the projected needs of the auto industry — be allocated for facilities that will support the production of auto grade chips in some manner," he said.

This Is A Global Issue

The chip shortage has affected automakers differently. Ford recently announced plans to cut production at six of its facilities, including the one that manufactures the incredibly popular F-150. Previously, the American automaker stated that the shortage could lower earnings by $1 billion to $2.5 billion. 

General Motors is closing a few plants, but has also stopped offering its fuel-saving system on the Chevrolet Silverado 1500 for models with the 5.3-liter V8. Stellantis, previously known as FCA, has idled five factories in North America until the middle of April.

American automakers aren't the only ones that have been affected by the shortage. Nissan has resorted to idling two factories, Toyota is reducing the output of 10 models, and Honda is suspending production for a few of its plants in North America. Even all-electric automakers, like NIO, have been forced to suspend production because of the chip shortage.

Earlier this month, the Alliance for Auto Innovation asked the U.S. government for help because of the shortage. The group requested the government to mandate that silicon suppliers set aside a set amount of chips for automakers to use in automobile production. 

President Joe Biden stated that he would seek $37 billion in funding from Congress to boost chip manufacturing in the U.S. and has launched a 100-day supply chain study for four industries that includes semiconductors.

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