Many have said that leading automotive manufacturers are looking to be down $110 billion this year due to the current chip shortage. So how will this force these companies to adapt?

How Have the Auto Makers Responded to the Shortage?

Manufacturers like Ford, Tesla, Jeep, and many others have done their best to continue shipping their cars to dealers worldwide by simply losing some of the features we have come to love. Fortunately for them, these companies have determined that not everyone always wants these specific features, whether it’s lane assist, back lumbar support in the seats, or the many other features current day cars have known to come equipped with. Consumers are comfortable living without it. So removing some of these features has allowed manufacturers to focus on adding chips to their more popular models that are more likely to sell or are more likely to need these specific features. Although they’ve found a way to reduce the number of chips they require, these auto companies continue to have mass production of cars and trucks, waiting to have chips added to them before they can be shipped out.

Automatic robots in the industrial factory for assembly automotive products, automotive concept
Photo by Simon Kadula / Unsplash

Where did the Chip Shortage Come From?

As a consequence of the 2020 Global Pandemic, manufacturers could not keep up with demand due to company shutdowns and the ever-growing job crisis. While consumers weren’t purchasing many cars during this time, electronic sales increased due to the uprise of people being at home. As a result, these mass items have created a global shortage for vehicles, tech companies, and many other manufacturers that depend on these chips. Two years later and we are still dealing with the tricking effects.

Will the Chip Shortage Continue to Impact Auto Makers?

Current day, 2022; where do we see the future of the car shortage? Some are optimistic that 2022 will improve the situation, but we will continue to see this affect the car industry for a few years to come. Chip suppliers have committed to spending upwards of $150 billion on manufacturing, with companies like Samsung committing to building new sites in the United States. However, these efforts are a significant step toward rebuilding; we wouldn’t start seeing manufacturing until close to 2024. This will force auto manufacturers to adapt, and I’m optimistic that this will shift the way vehicles are manufactured for years to come.

Samsung Austin Semiconductor
Samsung Austin Semiconductor — The new plant will be even larger than this | Image: Samsung

As the situation continues to improve and companies are vested in getting their cars out and having lots full again, it’s not improving as quickly as some would like. I continue to see car lots in my hometown sitting empty with nothing but used cars that they have paid over the price they are worth, just to have something to sell. I will be curious to see how this will play out and unfold, especially with all of the promised cars of the future; electric vehicles.

In conclusion, it will take time, they will adapt, and slowly, we will start to see these manufacturers take steps towards avoiding a crisis like this in the future with semiconductors and parts that are necessary as we move towards more advanced electric cars.