Chip shortage expected to cost auto industry $110 billion in revenue in 2021

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The estimate is up 81.5% from an initial forecast of $60.6 billion from consulting firm AlixPartners in January.

expect the chip shortage to cut billions of their earnings this year. Ford said the situation will lower its earnings by about $2.5 billion in 2021. GM expects the chip shortage will cut its earnings by $1.5 billion to $2 billion.

"There are up to 1,400 chips in a typical vehicle today, and that number is only going to increases as the industry continues its march toward electric vehicles, ever-more connected vehicles and, eventually, autonomous vehicles," Dan Hearsch, a managing director in AlixPartners' automotive and industrial practice, said in a statement. "So, this really is a critical issue for the industry.

"By Q3, there's enough to get everybody back up and running for the most part," he said. "And then in Q4, we should get humming again and then next year get back to normal, hopefully."

 

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