Chips & component shortages – a challenge to the connected world!

The chip and component shortages and supply chain challenges have become a constant challenge for the automotive industry. Experts anticipate some improvement, but not until the next year.

The chip and component shortages and supply chain challenges have become a constant challenge for the automotive industry. As a result of the semiconductor shortages – some companies’ manufacturing plants have been shut on a temporary basis, and customers, on the other hand, are witnessing price hikes and uncertain waiting periods. The semiconductor shortage is expected to improve hopefully by end-FY2023.

What’s interesting is that the world is facing all these challenges when we are moving in a direction toward hybrid-electric or fully electric vehicles (EVs). The hybrids and EVs for obvious reasons, use far more electronic components than the traditional vehicles – engine control modules, the suspension and brakes, and the connected mobility solutions.  

Consequently, with the unavailability of required components, it has become all the more difficult for automakers and other suppliers to work on ascetics, the design factor coming at a compromise. 

According to SupplyFrame’s Components Intelligence Quarterly Report, the industry will stand an increase in component prices of up to 40 per cent in comparison to the previous quarter. Another report by AFS predicts an additional 8,10,461 vehicles falling victim to the microchip shortage this year indicating a 36 per cent hike compared to the sales lost in the ongoing year so far. 

Now, that the industry is unlearning a lot of old lessons and beginning to learn new ways to deal with the existing situation, automotive giants are approaching different solutions. For some OEMs, it is to partially manufacture the vehicles till the time the required components become available while others are simply axing some features from their vehicles. 

Well, it has become common knowledge by now that most car companies would be coming with a lot of discounts and offers because they have scraped off the premium features from their cars just to pump the vehicles out amid the global component shortages. So, a bit cost-friendly cars with missing features!

According to a report from CNBC, Tesla allegedly eliminated a redundant electronic control unit found in the steering racks of some Model 3 and Model Y vehicles, in order to hit production targets near the end of last year’s final quarter.

Similarly, automakers like – BMW, Audi, Mahindra, Volkswagen, and many others have chosen similar ways in order to hit the bare minimum in terms of production and sales. 

General Motors also sold its vehicles in the recent past without the heated seats and HD radio, claiming that these components can be retrofitted later. Ford has somewhat taken a similar route. The automaker is selling the vehicles with a promise to its customers – an up-gradation of the sold vehicle in due time for free. 

In the midst of all the trials and tribulations, the automobile industry has learned to survive but at what compromises, this still remains a question. 

To read the detailed analysis report for Vehicle Sales in May 2022, click HERE

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