Automobile Manufacturing Factory

Chip Shortages: Automakers get creative, leave out some vehicle high-end features

*Global automobile manufacturers are getting creative and reportedly cutting back on functions to keep production going as chip shortages continue

Gbenga Kayode | ConsumerConnect

As the global chip shortages continue to deepen, certain vehicle manufacturers reportedly have tried idling factories until the troubles blew over.

However, as the crisis keeps stretching into its fifth month and getting worse now, carmakers are being compelled to get creative in order to keep at least some production moving forward in their factories.

Nissan, agency report said, is leaving navigation systems out of thousands of vehicles that typically would have them because of the shortages.

Ram no longer offers its 1500 pickups with a standard “intelligent” rearview mirror that monitors for blind spots.

Renault has stopped offering an oversized digital screen behind the steering wheel on its Arkana SUV in order to also save on chips.

It was gathered that the crisis is an historic test for the century-old auto industry just as it is trying to accelerate a shift toward smarter, electric vehicles.

For decades, carmakers moved steadily to include more and better advanced features; now, they’re stripping some of them out ─ at least temporarily ─ to salvage their sales, Bloomberg report stated.

That rollback underscores the depth of the issues facing the industry.

ConsumerConnect had reported that BMW AG, Honda Motor Co. and Ford Motor Co. recently, all flagged worsening problems from chip shortages.

A failure to secure critical supplies is a massive short-term setback, millions of vehicle sales will be lost this year, and bodes ill for the future as competition from tech-savvy Internet and consumer-electronics companies intensifies.

Stacy Rasgon, who covers the semiconductor industry for Sanford C. Bernstein, said: “This probably gets worse before it gets better. It just takes a long time to bring this capacity online.”

It was learnt that modern cars are fast relying more on electronics that include semiconductors

NXP Semiconductor NV Chief Executive Officer Kurt Sievers also said the shift to electric vehicles is happening faster than anticipated, which has added to the increased demand for automotive chips.

NXP plans to ship at least 20% more auto chips by revenue in the first half of 2021 compared with the first half of 2019, even though car production has dropped about 10% over the period, Sievers said.

In his comment on the development, Mark Liu, Chairman of Taiwan Semiconductor Manufacturing Co., has cautioned the crisis is far from over.

His company, which is the world’s most advanced chipmaker and will be critical to any resolution, will begin to meet auto clients’ minimum requirements by June, but expects the car-chip shortages could last until early 2022, he said in an interview with CBS.

While automakers can’t just wait, a reaction to the shortage is to allocate the scarce components to more profitable and better-selling vehicles at the expense of other models ─ something manufacturers such as France’s Renault SA and Japan’s Nissan Motor Co. are doing.

Report further noted that carmakers are also building vehicles with less technology. Peugeot is going back to old-fashioned analog speedometers for its 308 hatchbacks, rather than use digital versions that need hard-to-find chips.

General Motors Co. said it built some Chevrolet Silverado pickup trucks without a certain fuel-economy module, costing drivers about 1 mile per gallon.

Likewise, Nissan is cutting the number of vehicles with pre-installed navigation systems by about a third, according to a person familiar with the matter.

Why can’t producers just make more chips?

The Japanese manufacturer, which in early January 2021 became one of the first automakers to warn of an impending shortage, is also prioritising chip supply to the two best-selling models in each major market, the person said.

In one instance, Nissan flew chip supplies from India to the United States (US) on a chartered cargo flight to help production move forward there. A representative for Nissan declined to comment.

Buyers of Renault’s sporty Arkana now have to settle for a smaller display without a navigation map, and forgo an option for a phone charger by induction, report said.

Stellantis NV, formed from the merger of Fiat Chrysler and PSA Group, also has modified the Ram 1500 pickup so that the digital rearview mirror that usually comes standard is now available only as an upgrade option, familiar sources stated.

The manufacturer is also using parts that don’t require chips from its more basic Ram Classic truck to keep the pricier version moving down the assembly line.

Spokeswoman Jodi Tinson said in an email, that “given the fluid nature of this complex issue, Stellantis employees across the enterprise are finding creative solutions every day to minimise the impact to our vehicles so we can build the most in-demand products as possible.”

‘A year of poor planning led to carmakers’ massive chip shortage’

It was gathered that the car industry’s predicament dates back to poor planning during the disruptive Coronavirus (COVID-19) pandemic and limited chipmaking capacity.

However, the situation is said to have been compounded by shrinking available cargo space as the global economy recovers from COVID-19. When automakers can secure orders, their chips often cannot ship.

Again, that bottleneck is compounded by the fact that major car-chip makers NXP, Infineon Technologies AG and Renesas Electronics Corp. account for just 40% of supply, with the remaining 60% split between tens of thousands of smaller designers. Those smaller players often lack the influence to get their chips manufactured at foundries when capacity is tight, according to report.

Carmakers, in the meantime are asking “a major chipmaker” to send microcontrollers that don’t meet standard specifications, a person familiar with the matter was quoted to have said.

Nonetheless, those sub-standard chips wouldn’t jeopardise safety essentials, like brakes, said the undisclosed source, but they could mean in-car entertainment or emissions monitoring systems are more likely to malfunction in extreme weather, report said.

Automakers and suppliers can accept whatever chips are available and rewrite the software to give them a new task, said Sig Huber, a consultant at Conway MacKenzie and a former head of purchasing at Fiat Chrysler.

Tesla Inc. recently said it alleviated issues by reaching out to new semiconductor suppliers, and then quickly writing new firmware for those chips.

Stellantis is working on more standardisation across its vehicle lineup rather than having to use specific chips for some models, Chief Financial Officer Richard Palmer said on an call with reporters in the week.

Palmer stated: “More standardisation and flexibility, which is key when we have supply constraints….  We’re managing scarcity.”

Manufacturers are also stocking incomplete cars, or “building shy” in industry parlance, to keep production lines humming for the time being, according to report.

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