Chip shortage could cost auto industry $110B, AlixPartners says

The worsening chip shortage could cost the auto industry $110 billion in lost revenue this year, consultancy AlixPartners said early Friday in an updated forecast.

AlixPartners' latest prediction is nearly double its estimate in January that the total impact of the semiconductor shortage would be $61 billion.

The company said it also anticipates that net production of 3.9 million vehicles will be lost this year, bringing expected global light-vehicle production down to 80.7 million units.

Automakers have been idling plants for days or weeks at a time as the shortage worsens, with Ford Motor Co., General Motors and Stellantis taking some of the worst hits.

In recent weeks, BMW — which was once largely unscathed by the crisis — also has reported challenges stemming from volatility in the supply chain.

In first-quarter earnings reports, most automakers and suppliers said they anticipate the brunt of the chip shortage's impact to hit in the second quarter. Ford, for instance, warned it could lose half of planned production in the second quarter, though some estimates say the impact could fall well into the second half of this year or early 2022.

AlixPartners largely credits these losses to long semiconductor lead times and says the crisis has been exacerbated by other challenges across the supply chain, such as the severe winter storm in Texas and the fire at a Renesas chip factory in Japan earlier this year.

"We have had some exacerbating factors," Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners, told Automotive News. The more things are impacted, "the more people are in a more desperation mode to get capacity, secure capacity, keep lines running."

As a result? "There are real changes and real lessons that can be learned."