Chip Shortages into 2023 Part of a Perfect Storm Sweeping Away Old Car Companies

The world lost 11.3 million units of production in 2021 because of the chip shortage, according to AutoForecast Solutions. IHS predicts chip shortages will mean 7 million fewer cars in 2022 and 1.6 million in 2023.

The shortage of cars has increased the average selling price of the remaining new cars that were made and increased used car prices.

Global EV car demand is ramping up at the same time as the chip shortages and Pandemic supply chain problems hit regular carmakers. This gives Tesla a huge opening to ramp up production at the Austin, Berlin and Shanghai factories in 2022 and 2023. There is more demand for EVs and less competing production and higher prices from regular ICE cars.

By the time regular carmakers are back to “normal” they will be facing a Tesla in January 2024 that has made and sold over 2 million cars in 2022 and 4 million cars in 2023. A Tesla making over 1 million cars per quarter will be making $50 billion of auto revenue with $18 billion of gross profit. This should be $60 billion of net income in 2023.

Tesla will make about 20% more non-car related revenue like energy storage, insurance and solar.

Tesla with $250 billion in annual revenue would be in the range of Volkswagen and Toyota who make $240-280 billion per year in revenue. However, Tesla will be far more profitable.

The traditional car companies will become smaller and weaker than Tesla in every way. They will still need to try to transition their factories and employees to making the new batteries and electric cars. Tesla will be growing its technology lead.

SOURCES – Motortrend
Written by Brian Wang, (Brian owns shares of Tesla)

15 thoughts on “Chip Shortages into 2023 Part of a Perfect Storm Sweeping Away Old Car Companies”

  1. There was a fire at the ASML factory recently, that's going to have a big impact on the semiconductor industry. Supply chain shortages might get worse again…

  2. I think it will become something like the car renting websites whereby you loan your car out.

    Everyone could get in the act…your car could leave your smart garage go do some rides…come home all without your intervention.

  3. Solar peaks the same time demand peaks in warm climates. Which are admittedly the only place anyone sensible would live.
    But astoundingly, there are millions of people living in places so cold that ice forms in winter. And they need power too.

    Getting back on topic. Solar power only recharges your car if you are parked in a place with a charger. For people parked at home during the day that's fine. For people who are not that's $billions in installations that need doing.

  4. Can't be done with Lithium batteries. Every single cell in the huge battery packs have their own little chip monitoring and controlling the current and voltage of that cell.
    Otherwise they tend to get unbalanced, and catch fire.

    Mind you, these are very simple chips. The sort of thing you can make in any industrialized country. Not like 64 core CPUs.

    Then, running the motors themselves is another matter. Yes they could run old fashioned style electric motors like a U-boat, but that doesn't give the throttle control or efficiency that make electric cars usable in the first place.

    Lastly, there are a bunch of chips on board a modern car that are required by law. Yes, the government makes a bunch of such things mandatory.

    • Airbag controls
    • Reversing cameras
    • Electronic data collection
  5. I’d like to make chip-free cars. Big batteries like diesel electric subs…toggle switches and analog gauges

  6. Tesla doesn't make its own chips. they did design a custom chip for their Fulll self driving computer. But they hired another company to produce it.

  7. It is cheeper to charge your car during the day on a clear day in the sprin, fall, or winter. However on hot summer days air conditioning demand exceeds what solar can produce.

  8. the chip making process ned is determined by the number of transistors on the chip. for memory and high performance CPUs they use the latest manufacturing processes to make the smallest transistors (about 10nm in size). For the vast majority of chips on the market use 100nm transistor size.

    The problem had nothing to do with how the chips were made. It is just due to supply disruptions caused by the pandemic. If the chip manufactures cannot get he specialized materials they need they cannot make chips.

  9. basically this is correct. Many circuits use microcontrollers. and there is a problem getting enough of them. Many manufactures make them but they are not all the same. The electical connections are different and the simple software they use may also be different. All Tesla did was modify their circuit boards so that they could use several different chips. So when the boards are assembled they use whatever chip is available and load that chip with the appropriate software.

  10. Notice that you get a plateau, and then a drop off? In 2009, the age of the vehicle basically didn't matter until you hit 9 years, then they began disappearing. Half had disappeared by 14 years.

    By 2015, the plateau lasted 12 years, and only about half the cars had disappeared by 17 years.

    Today? Wouldn't shock me if it were up to 15 and 20.

  11. Still going to need a LOT more grid capacity, and capacity in terms of actually reliable power, not solar and windmills.

  12. I dropped Netflix when they did that; Netflix had been great for people like me who lived in rural areas with painfully slow internet and no cable. As soon as they started their transition to streaming, the service became pathetically bad for people who didn't have the option of switching to streaming.

  13. Solar and wind could be outright free, and they still wouldn't be very cheap once you took into account the intermittency, which requires either that conventional plants adequate to handle the load sit idle, or starkly huge amounts of storage.

    Solar at least has the advantage of peaking approximately the same time as demand peaks, which means that the grid can absorb a few percent of solar without much disruption. Wind doesn't even have that going for it.

  14. Unless Tesla produces its own semi conductors, using more modern or obsolete chips solve nothing.
    The shortage is hitting every kind of chip, including the most advanced ones.
    And cryptocurrency mining has not helped at all.

    But maybe you can digress and explain in more detail what you said and how that helps Tesla

  15. I've given up on nuclear in the US. Politicians appear to believe the public is irrationally afraid of nuclear – or perhaps they just don't want to be painted as anti-environment by the radical greens, and don't see any political up-side of fighting for nuclear power.

    I saw a ray of hope about 13 years ago, only for the 'scary' mushroom clouds of Fukushima to blot it out. First time I saw a video of those hydrogen gas explosions, I instantly knew the nascent US nuclear renaissance was over.

    The US has 'moved on'. Most people are resigned to the idea that nuclear isn't going to be part of our energy future, it's too hard, too expensive, the greens will never allow it, so we're going to shift over to renewables. And the fossil fuel industry is cross-investing, aiming to transition to renewables. They're not going to encourage nuclear power, they'll lobby against it – renewables will become their new cash cow.

    Small modular reactors may sound like a politically and financially feasible path, but I'm betting when it comes to actually building the things, the "radical greens" will come out and squash each individual proposal by increasing the projects' financial and political costs. No proposed site will be "safe enough" or "low enough environmental impact".

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