Chip shortage affects cars: many companies halt production | right Now

More and more car manufacturers are being forced to reduce their production due to a shortage of chips. Stellantis, Fiat Chrysler and new Peugeot to merge, shutting down five plants in North America. NIO, the Chinese electric vehicle manufacturer, has announced that it will stop production at a plant in Hefei for five business days.

Earlier this week, Volvo announced that a global shortage of semiconductors would hurt truck production from the Swedish company. The company plans to shut down a portion of its production chain for a day in the second quarter, which could total up to two to four weeks.

Nissan was also forced to close factories in the United States and Mexico for a few days. General Motors has extended the previously announced production moratorium.

Modern cars contain many chipsets that support functions ranging from brake sensors and parking cameras to smart navigation and sound panels. The Coronavirus pandemic puts additional pressure on the chip sector. Now that so many people are forced to sit at home, the demand for electronics such as computers, smartphones, televisions, and game consoles has increased very rapidly.

Additionally, moving to work from home requires faster internet connections and additional servers, and this also requires advanced chipsets. Recently, a fire in a factory owned by Japanese chip maker Renesas, which saves so much for the auto industry, has exacerbated the scarcity.

Car manufacturers have already warned in their quarterly numbers of the financial consequences of production delays. Consulting firm AlixPartners calculated at the end of January that the semiconductor shortage could cost carmakers 61 billion euros in sales this year. Recent setbacks only threaten to exacerbate financial concerns.