While hopes of a supply chain recovery persisted throughout the year, industry insiders now expect microchip shortages to last throughout 2023.
Semiconductor and chip manufacturers were hit especially hard by the chaos in 2020, forcing them to navigate through a combination of labor shortages and unprecedented demand. Despite the chaos, a sense of equilibrium began to return, but it seems that normalcy has now been postponed.
Unfortunately for technology suppliers, the auto-industry rediscovered its interest in electric vehicles not too long after the COVID pandemic. As automakers scaled up production, their need for components grew, again placing strain on global supply chains and lengthening the microchip shortage. The demand is only likely to grow in the coming years, as analysts expect EVs to dominate the market by the end of the decade.
This isn’t to say that technology companies are unhappy. The increased workload has brought with it investments and development opportunities, allowing businesses to build new facilities and hire more employees. Executives now know that ending the microchip shortage will be a long-term effort, and isn’t likely to happen anytime soon. Even a turnaround after 2023 isn’t guaranteed, although anticipated economic difficulties may force some automakers to cut production, easing demand.
What does this mean for consumers? As most buyers are aware, vehicle prices are at all time highs, and despite availability improvements, EVs sell for an average of $66,000. Unfortunately, this number isn’t likely to decrease until the microchip shortage is successfully mitigated. For now, drivers should take advantage of dealership promotions on financing, insurance and maintenance.
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