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The White House is getting involved in the ship shortage again. This time they are considering invoking Cold War-era nation security laws to make companies in chip production release their data pertaining to inventory and sales numbers. Gina Raimondo, US Commerce secretary, provided companies with a voluntary questionnaire and requested they return it with the desired information within 45 days. Raimondo said, “‘I don’t want to have to do anything compulsory but if they don’t comply, then they’ll leave me no choice,” referring to the possibility of invoking the Defense Production Act or other tools to force them to give up the data. This act gives the President authority over private industry to direct the production and distribution of products in a national crisis. The Commerce Department wants to determine if certain companies are purchasing many more chips than are needed and stockpiling them artificially maintaining the inflated prices and demand for chips.
CEO of Volkswagen’s North American unit, Scott Keogh, said in an interview with Bloomberg that he doesn’t expect the market to return to normal until the second half of 2022. The normal he is speaking of is being able to produce every vehicle that they would like to produce without parts shortages causing cancellations and plant idling. I think that is a pretty optimistic outlook considering that the big 3 US auto manufacturers have all but thrown in the towel for their 2022 model year vehicles. Currently orders are seeing tons of constraints and fleet companies getting a fraction of the inventory allocated for the 2022 model year that they had requested.
The industry is expecting the trend of falling passenger vehicle sales numbers to continue again for the 4th month. An industry group in China predicts as much as an additional 17% drop in September. The global auto industry is expected to take a hit of more than $200 billion in revenue in 2021. Keep in mind that in May of this year the estimate was around $110 billion, and in 4 short months that estimate has doubled. These trends are shocking and for what is it worth, I think that we are looking at until 2023 at least before things go back to “normal”: I definitely use the normal hesitantly as it looks like the auto manufacturers are going to use the pandemic and the parts shortage to usher in a new normal for the American market. Jim Farley, the CEO of Ford, came right out and said a few weeks ago that dealerships will not have inventory at levels like they used to and people need to get acclimated to ordering their new vehicles and waiting for them to be produced instead of going to a dealership and driving one home.
GM’s upcoming generation of electric vehicles is going to be powered by a new Ultium Drive three motor system that will be designed in house. The new vehicles will have five interchangeable drive units and 3 different motors. They are claiming that some of the power electronics are half the weight and volume of the current parts and have as much as 25% more power. GM engineers used computer assisted engineering, artificial intelligence, and machine learning to tune the three motor powertrain to maximize off-road performance and in city comfort.
GM is still dealing with huge recalls on their Bolt EV for battery fires. Since 2016 GM has built around 142,000 Bolts, all of which have been recalled. Owners of these cars are now being told to not park in garages, limit their charge to 90% and don’t go below 70 remaining miles of range. GM is also recommending parking 50ft away from other cars. This is completely ridiculous for the people who trusted GM to provide them a safe reliable vehicle and even paid a premium to be an EV owner. GM is making these crazy statements to limit their legal liability even though they know how inconvenient or even impossible this is for some of their customers. How many people have a $30,000 potentially explosive paperweight in their driveway.
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