Ford and Stellantis warn auto chip shortage could last until 2022

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Ford and Stellantis executives warn auto chip shortage could last until 2022,
Image: YouTube | Ford Europe

Ford and Stellantis recently warned that the global chip shortage could persist into 2022.

The automakers also revealed how the component crunch affected their earnings and operations during the first quarter of this year.

Last month, leading pure-play foundries made plans to increase their electronic auto parts output to address the shortfall. Unfortunately, despite their efforts, OEMs will be grappling with the challenges created by the bottleneck for the foreseeable future.

Ford Idles Factories, Slashes Outlook Due To Chip Shortage

Ford announced the temporary shuttering of two of its German plants this week due to the semiconductor shortage.

The manufacturer is pausing production at its Cologne factory from May 3 to June 18 and June 30 to mid-August. Ordinarily, the facility assembles 1,000 Ford Fiesta superminis every day and manufacturers engines. Similarly, the automaker is halting work at its Saarlouis complex from May until sometime in June. Under normal conditions, the site makes 1,000 Ford Focuses per day.

A Ford spokesperson said the corporation would “make up for the lost production” as best it can.

The firm’s announcement follows its recent declaration that the shortfall prompted a $2.5 billion cut from its full-year earnings forecast. CEO Jim Farley said the manufacturer believes the bottleneck would reduce its second-quarter production by around 50 percent. It previously projected the crisis would result in a 17 percent decrease in automobile assemblies.

Farley also commented that the semiconductor shortage could continue into 2022.

CFO John Lawler added that chip crunch would curtail its output by 1.1 million vehicles in 2021. Earlier this year, the company estimated the crisis would negatively affect its production by 200,000 to 400,000 personal transports.

Ford has ramped down work at multiple facilities since the component bottleneck began in late 2020.

At present, its Kansas City-based F-150 truck and Transit van factory is undergoing a month-long shutdown. It took its Chicago Explorer SUV assembly center off-line in April and will not reopen it until mid-June. Moreover, it ceased work at its Dearborn, Michigan plant for two weeks last month even though it makes its lucrative pickup trucks.

Stellantis Provides Update on Chip Shortage Impact

Stellantis, a newly formed European automobile conglomerate, also recently explained how the chip shortage had impacted its business.

The firm revealed the supply chain disruption curbed its output by 11 percent, or 190,000 vehicles, in the first quarter. The organization expects the crisis will have an even greater impact on its production efforts in the current period. CFO Richard Palmer stated that the corporation’s visibility is “relatively limited” but expects the bottleneck to continue into 2022.

The conglomerate has been making operational changes amid the ongoing electronic parts shortfall. The automaker is outfitting its vehicles with standard rather than specialized components at eight of its 44 centers worldwide.

In spite of its sourcing challenges, it also intends to move forward with its 2021 release schedule. It intends to start making next-generation Jeep Grand Waggoneers in Q2 and refreshed Jeep Grand Cherokees in Q3.

Stellantis, a combination of Fiat Chrysler and PSA Group, has encountered significant hurdles after commencing operations in January. It idled five European plants due to inadequate supplies in February. The following month, it announced plans to temporarily closed five assembly sites throughout North America in April.

Because production capacity and raw materials are scarce worldwide, there is no way to alleviate the shortfall quickly.

However, leading semiconductor manufacturers and foundries have stepped in to mitigate the effects of the problem. Intel CEO Pat Gelsinger said his corporation is working on fabricating badly needed car parts using its fabs. In addition, TSMC, a foundry service provider for several top auto component vendors, committed to spending $2.8 billion to increase its vehicle chip output.

Hopefully, the efforts of those corporations will help Ford, Stellantis, and their contemporaries swiftly get back on track next year.

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