Chip Shortage Was Worse Than COVID for Stellantis

The global chip shortage continues to hurt the supply chains of several goods, and cars are no exception. Despite projections that the shortage may end soon, most companies are not out of the woods yet. The shortages have caused delays and shortages that have had a nearly incalculable financial impact on several automakers.

Stellantis says the chip shortage was worse than COVID

The Stellantis Palazzina Mirafiori plant. Analysts believe that the global chip shortage has been worse for Stellantis than the COVID-19 pandemic when it comes to vehicle production
Stellantis Palazzina Mirafiori plant | Stellantis

According to a report from Reuters, the impact of the global chip shortage will have a harsher and longer-lasting effect on Stillantis’ car production in Italy than that caused by the coronavirus (COVID-19) pandemic. This statement came from the FIM-CISL, which is an Italian autoworker and mechanics union.

The global chip shortage has caused Stellantis to shut down or delay production in several plants across Europe and the United States. The automaker is estimating that they will fall short of their 2021 production goal by 1.4 million vehicles. Furthermore, experts believe that the impact of the global chip shortage will carry on into next year.

“The semiconductor hurricane is causing production stoppages that are weighing more than the lockdown in 2020,” FIM-CISL head Ferdinando Uliano said. “The forecasts are that such situation will carry on for the whole first half of 2022”.

The FIM-CISL union said that Stellantis produced 319,000 cars between January and September 2021, an 11% increase from last year’s same period. In 2020 Stallantis had to shut down several plants due to the coronavirus outbreak.

Despite that increase, Uliano does not believe that Stellantis will reach 2020’s production output of 461,000 cars. “It’s practically impossible, the chip situation is getting more serious, and we’ll have further heavy closures,” said Uliano.

The FIM-CISL head is also concerned about Stellantis having to alter its future plans, such as expanding EV production, which could impact autoworker jobs. “The main risk is that Stellantis decides to delay planned investments and new model launches, as the chip crisis pushes sales down,” Uliano said.

Some automakers have thrived amid the chip shortage

A white Tesla Model 3 facing toward the right in a black photo studio
Tesla Model 3 in white | Tesla Motors

While the FIM-CISL believes that the global chip shortage will have a lasting effect on Stellantis’ Italian vehicle production, other automakers have weathered the shortage with minimal negative impact.

Hyundai managed to keep their production relatively nominal during the shortage. Some have speculated that the Korean automaker hoarded chips to ride out the shortage and keep its production going.

Tesla is another automaker that has sailed through the global chip shortage with record-breaking production numbers. The EV maker managed to see the shortage coming and made several adjustments to compensate for the lack of semiconductors on the market. Tesla switched suppliers and changed the firmware on their vehicles to work with different microcontrollers that were readily available rather than those in short supply due to the chip shortage.

Elon Musk predicts that the shortage will end by 2022

Tesla CEO Elon Musk addressing the media.
Tesla CEO Elon Musk | Julian Stähle/picture alliance/Getty Images

Despite the FIM-CISL forecasting that Stellantis’ Italian car production will continue to suffer into next year, Tesla CEO Elon Musk recently stated that he believes the chip shortage will likely end in 2022.

His optimism on the matter comes from the fact that more chip fabrication plants are being constructed, so the capacity for chip production will go up. While Musk is pretty close to the subject matter he is commenting on, it is still only a prediction, and it is still unclear to many experts in the industry when the global chip shortage will end and how long its effects will last.

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