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Chip shortage expected to cost auto industry $210 billion in revenue in 2021

Ford began resuming automobile manufacturing within the U.S. on Might 18, 2020 with new coronavirus security protocols resembling well being assessments, private protecting tools and facility modifications to extend social distancing.

Ford

Endlessly this yr, the continued semiconductor chip scarcity is now anticipated to value the worldwide automotive business an estimated $210 billion in income in 2021, based on consulting agency AlixPartners.

The forecast is nearly double it earlier projection of $110 billion in May. The New York-based agency first launched an preliminary forecast of $60.6 billion in late January when the elements drawback began inflicting automakers to chop manufacturing at crops.

“In fact, everybody had hoped that the chip disaster would have abated extra by now, however unlucky occasions such because the COVID-19 lockdowns in Malaysia and continued issues elsewhere have exacerbated issues,” Mark Wakefield, world co-leader of the automotive and industrial apply at AlixPartners, stated in an announcement.

AlixPartners is now forecasting that 7.7 million models of manufacturing might be misplaced in 2021, up from 3.9 million in its Might forecast.

Automakers throughout the globe, together with Ford Motor and General Motors, had warned of large earnings cuts this yr because of the chip scarcity. However some, if not a lot, of these losses have been offset by resilient client demand and higher profits from record vehicle prices.


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