The New Car Chip Shortage: An in Depth-Look

The new car chip shortage is a hot topic right now. And no, that doesn’t mean that Bosch is going to open a store selling black band t-shirts to Scene kids. It’s the reason that the autos market, both new and used, is going insane right now. Moreover, it’s the reason you should not be buying cars right now. Hell, you shouldn’t even be buying an electric toothbrush right now because the parts are so expensive. Now, it’s time to take a hard look at all of the factors that got us here.

The Coronavirus caused the new car shortage

An empty dealership lot in Laurel, Maryland USA
Empty dealer lots are a common sight these days | Jim Watson via Getty Images

Let’s start with the most obvious reason for the new car chip shortage. The Coronavirus has, frankly, been an issue for much longer than it needed to be. Hell, look at New Zealand. Regardless of your stance on the whole virus ordeal, it’s a big reason for the new car chip shortage. Turns out, if people are getting sick and being sent home, they aren’t out building cars, or more importantly, semiconductors.

As a result, that drives up the price. Demand for new cars is high while people try and get outside while they can. There will be another round of lockdowns in the US if we can’t control the virus, and people are getting out of the house any chance they get. As demand spikes, factory workers are still at the mercy of whatever COVID-related necessities are in effect at their workplace. Meaning, they can’t make cars fast enough. According to a study by iSeeCars, prices are up 32% in the last year.

Bosch says supply chains are another cause of the chip shortage

Bosch's logo outside their factory in Germany; their inability to produce chips fast enough is a reason for the new car chip shortage
There’s more chips in a bag of Lay’s than in Bosch’s plants right now | Jens Schlueter via Getty Images

However, as we all know, that spike in price isn’t just related to a spike in demand. No, the new car chip shortage is also caused by, well, chips. Or more scientifically, semiconductors. These little pieces of silicon control just about every electronic device in your house. Unfortunately, these things take time to make. Bosch says it’s because our supply lines are outdated, and I’m inclined to believe them.

As a result, the German semiconductor manufacturer has put billions into new plants to produce semiconductors. However, it isn’t just the places that make semiconductors that are contributing to the new car chip shortage. We also need the materials that go into semiconductors. Those materials, like silicon, take a long time to process and refine. This, in turn, worsens the supply of semiconductors.

When will the chip shortage end?

An Audi dealer in Poland
Busy dealerships may be a thing of the past | Karol Serewis via Getty Images

Question is, when does this stop? Frankly, not anytime soon. Bosch says things will keep sucking well into 2022. It’s fine, I didn’t want to play the new Spiderman game on my semiconductor-addled PS5 anyway. All joking aside, we’re going to be waiting for a while. However, once those new plants and supply lines go into effect over the next 6-12 months, we can expect to see things get easier.

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