Elon Musk Thinks The Chip Shortage Will End Next Year

The global chip shortage has had a significant impact on automotive production in America and abroad. However, Tesla Motors CEO Elon Musk thinks that the industry may not have to suffer through it much longer. According to a report from Reuters, Musk recently weighed in on the chip shortage and why he thinks it will end sooner than we think.

Elon Musk believes that since new semiconductor plants are being planned or currently under construction, there might be a light at the end of the tunnel.

Tesla’s CEO was explicitly asked at an event how long he thought the global chip shortage would continue to affect car production. Musk replied: “short term I think.”

“There’s a lot of chip fabrication plants that are being built,” Musk continued. “I think we will have good capacity for providing chips by next year.”

Elon Musk made the comments during a panel with Stellantis and Ferrari Chairman John Elkann at Italian Tech Week.

The chip shortage has hit some automakers harder than others

President Joe Biden discussing the global chip shortage
President Joe Biden | Amr Alfiky-Pool/Getty Images

The global pandemic has had a ripple effect on several industries, and even a year later, the full impact is not entirely known. The one thing that is certain is that COVID-related shutdowns have significantly hindered supply chains for several finished goods, including cars.

When major semiconductor plants shut down for extended periods, that meant indispensable automotive parts such as ECUs and other computer-controlled components could not be produced. With automakers unable to get their hands on vital parts, some of them were forced to delay or completely halt production.

Subaru had to shut down a plant in Japan, as did a BMW plant in Germany that produces vehicles for its MINI brand.

Ford and General Motors also suffered plant closures due to the chip shortage. The situation has gotten so severe with American automakers that President Biden recently met with representatives from “the big three” (Ford, Stellantis, and General Motors). In the meeting, the Biden administration requested that the American auto brands voluntarily submit production information so that the government could have a more detailed understanding of how the chip shortage is affecting their production.

Since plant closures mean paused jobs, the chip shortage in the automotive industry can have a significant negative impact on the U.S. economy if nothing is done to remedy it.

Not all automakers have been hit hard by the chip shortage. Hyundai saw record-breaking sales while other OEMs were suffering through plant shutdowns. Some experts have suspected that Hyundai came out of the chip shortage unscathed because it forecasted the shortage coming and stock-piled extra chips.

Tesla is another manufacturer that managed to escape major issues related to the chip shortage. Tesla credited their success through the shortage to changing suppliers and re-working the firmware of its vehicles to work with different types of microcontrollers that are less dependent on the semiconductors that are so hard to come by.

If Elon Musk is right, these issues will not be a problem for automakers within a year, but Musk is just one person, and if recent history is any indicator, this chip shortage may still have some surprises in store.

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