The Weird Reason Why RVs Are More Expensive Right Now
The average vehicle uses between 50 and 200 microchips to manage everything from infotainment systems, fuel management, advanced driver safety features, and much more. Feature-packed luxury models likely use two times as many chips. It’s no surprise that the automotive industry is one of the worst affected by the global semiconductor shortage, with potentially $110 billion in lost revenue this year alone. The RV industry hasn’t gone unscathed either, with buyers paying higher prices for camper vans and experiencing delivery delays.
The semiconductor shortage is disrupting the entire auto industry.
The microchip crisis began brewing in 2018 when Trump imposed 25-percent tariffs on $34 billion worth of Chinese imports. In 2019, Trump exacerbated things further by banning the sales of American-made electronic components, such as semiconductors, to Chinese telecommunications giant Huawei, one of the largest buyers of chips in the world.
Nationwide lockdowns began in late May 2020 and affected tens of millions of Americans. Numerous companies enacted remote work policies, with many electing to adopt telecommuting permanently. As a result, consumers and organizations began stocking up on electronics necessary to support a virtual workspace for the long term. The third wave involved smartphones, tablets, televisions, home entertainment systems, and game consoles flying off the shelves.
Countless companies, including chip manufacturers, were forced to halt operations for some time during the last half of 2020. During this time, consumer demand for products requiring semiconductors continued to grow unabated—including RVs and RV-related equipment, according to RV News. By the time 2021 rolled around, the chip crisis worsened while the number of RV buyers continued to multiply. If the microchip shortage wasn’t challenging enough for vehicle manufacturers and dealers, another material shortage is playing its part in complicating the supply chain.
A foam shortage is responsible for skyrocketing RV prices
It turns out that semiconductors are only the tip of the proverbial iceberg when it comes to supply chain woes, as demonstrated in an article published by USA Today. Remember that devastating cold snap that hit North America in February? The auto industry is still experiencing significant setbacks due to a shortage of petroleum-based products, including plastic parts and seating foam. The sudden Arctic blast greatly affected Texas, a state that typically has mild winters.
Three severe winter storms swept across the United States between February 10 and 11 of 2021. The sudden Arctic blast greatly affected Texas, a state that typically has mild winters. Inadequately winterized natural gas equipment caused the state to suffer a significant power crisis, leaving numerous residences and businesses without electricity. Oil production requires a steady supply of electricity, typically provided by the power grid.
Adding to the crisis, some manufacturers are running out of critical petroleum-based products after the recent freezing weather in Texas led to shutdowns of crucial petrochemical plants. Industry analysts expect shortages of plastics and petroleum-based automotive products, particularly seating foam, as reported by RV Business.
Five petroleum companies affected by the power outages produce propylene oxide, the principal chemical required in foam production. Though propylene factories in the Gulf of Mexico were affected by the same winter storm, U.S. propylene production was utterly devastated.
RV sales have increased over 600 percent from last year
Fortunately, the Biden administration expects Congress to pass the U.S. Innovation and Competition Act later this year. President Biden hopes to offer domestic microchip manufacturers $52 billion in subsidies to incentivize supplying the American market.
The bill further states: “The goals of the directorate shall be, among other things, the strengthening of U.S. leadership in critical technologies through basic research in key technology focus areas, such as artificial intelligence, high-performance computing, and advanced manufacturing, and the commercialization of those technologies to businesses in the United States.”
This bill couldn’t come at a better time as RV sales have increased over 600 percent from last year. As reported by us in a previous article, you might have a problem finding an RV or a campsite this summer due to increasing RV sales.