The semiconductor chip shortage continues to be the dominant news item in the automotive supply chain world. Not that anyone is surprised by this anymore. The NTEA, the association for the work truck industry, said in its May 2021 edition of NTEA News that it expects the semiconductor chip issue to cause some sort of disruption to the production of work trucks until at least the third quarter of 2021.
Auto analysts say passenger car construction could be impacted well into 2022 or even 2023. If so, expect more headlines like this one:
Nissan will make 500,000 fewer cars this year
Nissan CEO Makoto Uchida told CNBC, for example, that not having enough chips (along with an increase in prices for raw materials) will mean the automaker will build a half-million fewer vehicles this year.
“The impact we foresee as of speaking is about 500,000 units in terms of the production this year,” Uchida told CNBC.
This is just the latest in a long, long series of automakers that have had to adjust downward their production schedules this year. The details are constantly changing, but Ford, General Motors, Volkswagen, Stellantis, Hyundai, Jaguar-Land Rover, Jeep, Mercedes-Benz and Subaru are just some of the companies on the list. Overall, analysts have predicted that the industry will produce somewhere between 1.5 million and 5 million fewer vehicles this year. I expect that the higher range will end up being the more accurate one.
Hyundai ready to invest $7.4 billion in the US by 2025
Lower production numbers don’t mean everything is being put on hold. Looking forward, Hyundai had some news to announce Thursday about its plans to invest in U.S.-based production. Specifically, by 2025, the Hyundai Motor Group will invest a total of $7.4 billion in the U.S. in part so it can start building battery electric vehicles in the states. Hyundai said it will start building EVs in the U.S for domestic sales starting in 2022.
“This investment demonstrates our deep commitment to the U.S. market, our dealers and customers,” José Muñoz, Hyundai’s global chief operating officer and the president and CEO of Hyundai Motor North America, said in a statement. “Hyundai will lead the future of mobility in the United States and around the world. Our efforts are proof positive that Hyundai will continue to pursue excellence in our current and future product lineup.”
Hyundai currently has one vehicle production plant in the U.S., in Montgomery, Alabama. The company spent $1.7 billion to build the plant, which opened in 2005 and now builds around 300,000 units a year in normal times. The 3,000-employee plant currently builds the Sonata, Elantra and Santa Fe and will start building the Santa Cruz sport truck there later this year. In 2019, Hyundai announced it would spend $410 million to expand the plant in preparation for the Santa Cruz. Hyundai also operates port facilities in Georgia, Pennsylvania, Oregon and California, along with design and technical centers across the country.
The $7.4 billion will be used not just to build EVs but also on Hyundai’s plans for “robotics, urban air mobility (UAM) and autonomous driving technology to ensure future competitiveness” as well as “advancing the hydrogen ecosystem in the U.S.,” the company said.