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Massive Impact of Chip Shortage Falls On Consumers

The electronic chip shortage will fall hard on car buyers in terms of tight availability, high prices and new models missing a lot of the most prized tech features. And there is no relief in sight, as the demand for chips in cars increases with the rollout of vast fleets of new hybrid and all-electric models.

AlixPartners consultants projects the chip crisis will cost the global auto industry $210 billion in revenues this year, nearly double its estimate in May.

With temporary auto plant closings and production slowdowns, new car inventory is very thin, coinciding with the huge pent-up demand of the post-pandemic lockdown sales rebound. This supply and demand pressure is driving new and pre-owned car prices stratospheric.

In a final irony of this perfect storm, many safety and convenience features, including real-time 360 video camera views, infotainment and device interfaces, all of which have supported the dramatic rise of car prices in the last decade, are simply being left out of new models.

And because of electronics installation sequencing, function testing and massive service training requirements, the chips simply cannot be added after the fact to activate those features.