Southfield's AlixPartners says chip shortage to cost carmakers $110bn in revenues

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Southfield's AlixPartners says chip shortage to cost carmakers $110bn in revenues

Late on Friday, AlixPartners, the Southfield, Michigan-headquartered business consultancy firm, said in a report that the recent leg of rancorous semiconductor shortage across the globe, which had prompted a number of US auto plants to trim outputs, could cost global automakers as many as $110 billion in revenues this year, nearly 45% up from a prior forecast of $61 billion, casting further glooms on a grievously hurt global automotive industry.

In point of fact, latest forecast from the Michigan-based consultancy firm came forth as top-tier automakers such as Ford Motor Co., Volkswagen AG alongside Hyundai Motor had decided to trim output this year, while e-vehicle industry trailblazer, Tesla Inc., the world’s largest carmaker by market valuation, had signalled a decline in deliveries over current quarter along with Stellantis, the $52-billion merger between FCA and PSA, due to a mass-scale chip shortage.

Apart from that, AlixPartners had also added on its report published late on Friday that the crises alongside its by-products would likely to slash output by 3.9 million vehicles across the globe this year.

Global automakers may lose $110 billion in revenues due to chip shortage

Although, automakers had faced off a flurry of supply chain disruptions during a pandemic era new normalcy including a shortage of palladium used to curb emissions, yet the latest chip shortage, which analysts believe could have long-running repercussions on smartphone industry as well, had pushed global automakers on the cusp of an imminent collapse, as they were reportedly looking to create direct relationships with chipmakers, added the AlixPartners report.

On top of that, calling on a combined course of action to create a longer term “supply chain resiliency” in a longer term to avert such disruptions in the futures, the consultancy firm had urged global automakers to become “proactive” right now.

Nonetheless, a thriving consumers electronics goods’ sale during pandemic-led restrictions last year is believed to be a key impetus behind the latest leg of chip shortage.