The news: The global chip shortage has become unmanageable as Asian factory shutdowns compound their scarcity. The slowdown in auto manufacturing and sales could cost automakers up to $210 billion in lost sales, per Bloomberg. The forecasted losses have increased 91% from an earlier forecast update of $110 billion in May.
How we got here: Despite ongoing efforts to shore up the supply chain, the latest forecast from AlixPartners predicts automakers will build 7.7 million fewer cars than planned–almost double the consultant’s previous estimate of 3.9 million. And the global chip shortage is expected to continue for years to come.
The big takeaway: The entire auto industry faces massive earnings cuts this year due to the chip shortage, compounded by factory closures due to COVID-19 surges and various natural disasters.
A solution to the chip shortage is nowhere in sight. IHS Markit estimates that the semiconductor supply won’t catch up with industry demand until late 2022, and that the shortage of advanced chips will persist into 2023 and beyond.