Since the start of the COVID-19 pandemic, there have been widespread microchip shortages, production shut-downs, and supply chain issues. As of now, there is no end in sight, with experts saying these issues are expected to continue well throughout 2023.
The widespread semiconductor shortages and auto-industry production shut-downs that started in the early stages of the COVID-19 pandemic might slow down in the coming months, but analysts say these delays are expected to affect car sales over the next year, with no foreseeable end date. According to A&M, "Rising interest rates, reduced vehicle affordability and general economic uncertainty have started to cloud the picture for new vehicle sales heading into 2023." Estimated by Auto Forecast Solutions (AFS), about 4.4 million vehicles will be affected by the chip shortage by the end of 2022 alone- with well over 3.5 million vehicles already lost to the disruptions.
In previous years, automakers would outsource production of many parts to suppliers. Recently, however, there have been many supply chain issues that have reduced the success of this model- in addition to other pressing issues. For example, the shift towards EVs, a rise in vehicle demand, and the fact that automakers are a low priority on the production hierarchy against other consumer electronics, like iPhones, have all added pressure to the situation (Reuters). As a result, some OEMs have decided to in-source semiconductors. With a heavy industry-wide chip reliance on Asia, especially Taiwan Semiconductor Manufacturing Company (TSMC), manufacturers were constantly competing for resources. Tesla was one of the first car companies to bring chip manufacturing internal. Now other companies, like Ford and GM, are realizing the shortages won't be over anytime soon and are planning to begin developing their own chips as well.
"OEMs have also taken a new approach for in-sourcing, which has resulted in the creation of circular economies. Car makers are under heavy pressure to navigate fractured supply chains and elevated raw material and energy prices that have limited their access to already scarce materials. Several auto makers, including Stellantis and Renault, plan to utilize this new strategy by remanufacturing, repairing, reusing, and recycling vehicle parts and materials in a closed loop setting. By doing so, Stellantis and Renault will extend the life of vehicles and their component parts, build sustainability, and aim to generate $2 billion and $2.2 billion in revenue by 2030, respectively" (A&M).
According to Dionis Teshler, CTO of automotive security company GuardKnox, some of these chip shortage issues could also potentially be relieved by redesign of car components (NewsWeek). By creating software-responsive parts, companies could have hardware that could host multiple different functions when necessary, and then fewer physical parts would be needed. However, Teshler thinks it may take a few years to get to this point, and production shortages may still persist in the meantime.
AER is a valuable partner for OEMs and offers full support when it comes to remanufacturing parts and components for their vehicles. AER is able to repurpose electronics, including semiconductors, and send them back to OEMs for reuse. This process allows for less pressure on car manufacturers during a shortage, is more economical, and promotes sustainability at the same time. Additionally, as the automotive industry moves towards EVs, AER will be able to work even closer with OEMs and remanufacture more parts.
Sources:
https://www.newsweek.com/chip-shortage-will-continue-2023-say-analysts-executives-1699733