Chip Shortage to Cost Automakers $110 Billion in Revenues in 2021

The world semiconductor chip scarcity will price automakers $110 billion in misplaced revenues this yr, up from a previous estimate of $61 billion, consulting agency AlixPartners stated, because it forecast the disaster will hit the manufacturing of three.9 million autos.

The chip crunch has pushed house the necessity for automakers to be “proactive” proper now, and create “supply-chain resiliency” long term to keep away from disruptions in the longer term, the agency stated on Friday.

Automakers have in the previous had direct provide agreements with producers of sure uncooked supplies, together with treasured metals reminiscent of palladium and platinum, used in exhaust scrubbing programs.

The extra direct method to securing treasured metallic provides was launched after a provide and worth disruption in that market.

Automakers are actually taking a look at creating direct relationships with semiconductor makers, stated Mark Wakefield, co-leader of AlixPartners’ world automotive follow.

“These things are shocked into existence,” he stated.

Automakers have been reluctant in the previous to make long run commitments to purchase semiconductors or different uncooked supplies and tackle the monetary liabilities for such agreements, Wakefield stated.

Now, “the risk is real. It’s not a potential” danger of dropping manufacturing to semiconductor shortages, he added.

Separately, Ford Motor Co stated on Thursday it’s redesigning automotive components to use extra accessible chips, in response to the worldwide semiconductor scarcity.

© Thomson Reuters 2021

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