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Automakers could make 1.3 million fewer vehicles because of semiconductor shortage

Todd Spangler, Detroit Free Press on

Published in Business News

A trade group that represents automakers said a semiconductor shortage caused by COVID-19 could result in 1.28 million fewer vehicles being made in the U.S. this year.

In comments sent Monday to the Commerce Department, the Alliance for Auto Innovation said a recent survey done of automakers and supplies indicated the shortage could hurt auto production for another six months.

"The chip shortage has forced a number of automakers to halt production and cancel shifts in the United States, with serious consequences for their workers and the communities in which they operate," wrote John Bozzella, the group's president and CEO.

The Auto Alliance represents most major automakers doing business in the U.S., including General Motors, Ford and Stellantis. President Joe Biden in February directed the Commerce Department to review risks in the supply chain, including the pressures put on industry by a global semiconductor shortage.

Bozzella's letter was in response to that review. Because of last year's closing of auto manufacturing facilities due to COVID, semiconductor suppliers, most of which are based overseas, moved production into other types of semiconductors needed for personal computers and others goods. Semiconductors are integral to multiple systems on vehicles.

"We have been conducting anonymized surveys of our member companies since the onset of the chip shortage," Bozzella wrote. "The most recent survey was conducted within the last couple of weeks and, unfortunately, the high end projections indicate an even more significant impact to United States auto production than was projected in previous surveys. "

 

As part of his letter, Bozzella also urged that some portion of funding be used to boost the domestic production of semiconductors dedicated to making those used in automobiles.

"This could be accomplished by, for example, specifying that a particular percentage — that is reasonably based on the projected needs of the auto industry — be allocated for facilities that will support the production of auto grade chips in some manner," he said.

Early this year, Congress passed legislation allowing for funds to be used to incentivize manufacturing but the money hasn't been appropriated yet.

Biden has called for $37 billion to be committed to boosting semiconductor production.

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