A new report is suggesting that the ongoing chip shortage issues will cost auto manufacturers $110 billion in revenue in 2021.
The forecast is up from a previous estimate of $60.6 billion provided in late January. The cause of the forecast increase is linked to a fire at a Japanese supplier as well as a number of weather related issues in the supply chain.
Each vehicle requires an approximate 1,400 chips to deliver the various features and capabilities in modern vehicles. That number is expected to grow even further as demand grows for hybrid and electric vehicles.
The industry is expected to deliver 3.9 million fewer cars this year, up from the January forecast of 2.2 million produced vehicles. As a result, Ford is expecting a drop of $2.5 billion in revenue this year, GM is expecting a $2 billion dollar drop.