AD #2997 – Chip Shortage Crippling Production; Ford Mustang Going Fully Electric; BMW’s M Sets Sales Record
January 19th, 2021 at 11:45am
Listen to “AD #2997 – Chip Shortage Crippling Production; Ford Mustang Going Fully Electric; BMW's M Sets Sales Record” on Spreaker.
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Runtime: 9:29
0:07 Chip Shortage Crippling Car Manufacturing
0:42 Chip Shortage Comes at Worst Time for Industry
1:08 Pandemic Helps Cause Chip Shortage
1:42 GM Shows No Signs of Chip Shortage
3:14 Scania Ramping Up Electrification Efforts
4:31 Ford Mustang Going Fully Electric
5:12 Wild Custom Motorcycle
6:08 Tesla Suing Chinese Media Outlet
6:51 BMW’s M Division Sets Sales Record
7:25 BMW Updates Digital Key w/ Ultra-Wideband Tech
7:47 Small Barn Find Needs Identifying
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CHIP SHORTAGE CRIPPLING CAR MANUFACTURING
That chip shortage sure is crippling car manufacturing all around the world. Autoforecast Solutions reports that Mercedes cut production in Germany. FAW and SAIC were hit hard in China. Honda slowed production in the United States, England, and Japan. Suzuki, Subaru and Nissan also slowed production in Japan. Audi and Seat cut production in Spain. Mahindra cut production in India. Ford slowed production in the US, and so did FCA—whoops, we mean Stellantis!.
CHIP SHORTAGE COMES AT WORST TIME FOR INDUSTRY
This semiconductor shortage could not come at a worse time for the industry. Automakers lost a lot of production last year when they closed down for up to 8 weeks because of the pandemic. And they’ve been running on low inventory ever since. Wards Intelligence reports that North American production fell 20% last year, and says it could take several years before the industry can get back to previous levels.
PANDEMIC PLAYS ROLE IN CHIP SHORTAGE
So what the heck is causing the chip shortage? Bloomberg reports that when automakers closed down their plants last year due to the pandemic, they cancelled a lot of orders for chips. So the chip makers switched their production to consumer electronics, which were enjoying a sales boom because people in quarantine were looking for home entertainment. Then, car sales came roaring back far faster than anyone expected. But it was too late. That chip production was already spoken for, and we don’t know how long it will take to refill the pipeline.
GM SHOWS NO SIGNS OF CHIP SHORTAGE YET
But here is one very interesting side note. None of our sources show any slowdown at General Motors. In fact, Autoforecast Solutions says that GM is running 5 of its U.S. truck and SUV plants on overtime. Maybe GM will still get caught up in this shortage. But right now it looks like GM has one of the best purchasing and logistics teams in the industry.
SCANIA RAMPS UP ELECTRIFICATION EFFORTS
As we know, it’s not just passenger vehicles going electric, so are commercial vehicles. And since Scania thinks it was a little late to the EV bus segment, it’s accelerating the electrification of its truck lineup. It already has a plug-in hybrid and full electric truck, but Scania says in just a few years it will offer electric long-haul trucks that can carry 40 tonnes for 4.5 hours and charge back up in 45 minutes. By 2025, Scania expects 10% of its truck sales to be electrified and for that to jump to 50% by 2030. Scania also has investments in hydrogen technologies, but only sees a limited number of applications for them. It says a great deal of energy is lost through the manufacturing and converting of hydrogen fuel to electricity. In fact, three times as much renewable electricity is needed to power a fuel cell truck compared to a battery electric one. Repair and maintenance costs will also be higher compared to a BEV truck. However, Scania sees value in charging stations that use stationary fuel cells, especially for areas with lots of renewable energy.
FORD MUSTANG GOING FULLY ELECTRIC
Last week we reported that Mustang fans are going to have to wait a while for the next-gen version of the sports car because it won’t go into production until December of 2028. And there could be a good reason for the long wait. Autoforecast Solutions reports the standard Mustang is going fully electric as well. And it sounds like that will be the only powertrain setup. It’s also important to note the next-gen Mustang will be made at Ford’s Flat Rock, Michigan plant. To our knowledge, there hasn’t been a single other EV announced for that facility. So, it’s also going to take extra time to tool it up for electrics.
WILD CUSTOM MOTORCYCLE
BMW Motorrad showcased a number of custom bikes to highlight its all-new but old-school-looking R 18 engine and this one is just too wild to pass up. I don’t even know where to start to even try and properly describe it, but it looks like someone’s made up creation for a steampunk movie. It’s both beautiful and hideous and we can’t seem to keep our eyes off of it. The bike is the brainchild of Kingston Customs, which is known for some of its crazy designs. And surprisingly the customizer says it left the engine and frame 100% original.
TESLA SUES CHINESE MEDIA OUTLET
Tesla is suing Chinese media company, PingWest, over an article it published last month, accusing the EV company of having poor working conditions and quality issues at its factory in Shanghai. The claims range from the fairly innocuous complaints about the food served in the cafeteria, to very serious allegations that the company knowingly used defective parts to speed up production. PingWest says it received an indictment letter from Tesla over the weekend and will cooperate with the lawsuit. It has to submit any counter evidence by February 8th. Who knows if the allegations are true or what will happen? But this will be an interesting story to follow.
BMW’S M DIVISION SETS SALES RECORD
This next item proves that performance sells. BMW saw its sales drop over 8% last year but its M performance division fared much better. Despite the pandemic, BMW sold 144,218 M vehicles globally, which is a record. The performance division set sales records in the U.S. and China, which helped fuel its growth. BMW is launching three more M models this year, so it wouldn’t surprise us if it sets another record in 2021.
BMW UPDATES DIGITAL KEY WITH ULTRA-WIDEBAND TECH
And in other BMW news, the company introduced an updated digital key for iPhones that now uses Ultra-Wideband technology. It allows drivers to unlock or start the car without having to take their phone out of their pocket or purse. The new digital key debuts on the upcoming iX electric crossover.
SMALL BARN FIND NEEDS IDENTIFYING
We’ve got our first Barn Find of 2021, which comes from viewer Will Prudden. Will notes “A friend is contemplating purchasing some property with a barn and inside the barn was what appears to be a very small old car with wooden wheels. I was wondering if anyone might be able to identify it?” We’d say, it certainly is small. Too small, in fact, to be a production vehicle. It looks to us like the frame was cut and the rear end bolted further forward. We would guess this was used as a little runabout for all kinds of things around someone’s farm. But what do you think? Can anyone out there tell what kind of engine this is? Let us know in the comments section.
Have you ever heard of a supplier company called Gentex? No doubt a lot of you have. It started out as a little company on the west side of Michigan that made rearview mirrors. Then it cornered the global market on mirrors, and today it’s turning into a tech company that makes a lot more than mirrors. And on Autoline After Hours this Thursday we’re going to have Neil Boehm, the chief technology officer of Gentex, as our guest. So join John and Gary as they peel back the layers of how this industry works.
But that brings us to the end of today’s show. Thanks for watching and we hope to see you back here again tomorrow.
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Comments (27)
January 19th, 2021 at 12:19 pm
Sean, this VW Beetle fender scooter might be the inspiration for the BMW bike https://www.demilked.com/vw-beetle-inspired-motorcycles-volkspod-brent-walter/
January 19th, 2021 at 12:20 pm
What kind of chips are we talking about and who makes them? Those companies might be a good short term investment.
January 19th, 2021 at 12:27 pm
The custom R18 does look pretty cool to me but as with most custom bikes- the more custom they get the more they become garage queens as they become less functional.
January 19th, 2021 at 12:29 pm
Does BMW count badged M cars as part of their M numbers?
January 19th, 2021 at 12:29 pm
Sean I’m not real clear on how this Chip shortage can occur as you mentioned. Mainly because when contracts are awarded within the automotive industry they are for a specific volume and typically 4 year contracts. So even with a blip in production due to covid those companies are contractually obligated to supply chips at the rate they agreed to. So even if they found ways to sell product in the interim when production resumed so should the chips. If it causes shutdowns I would expect some lawsuits to soon follow.
On sports models selling well. My opinion is they cost difference from the base to M-series has shrunk. As car prices increase the top level and performance level cars haven’t seen as big of a jump and as that gap narrows and your already spending 40K for a car, why not spend the extra 10 or 15K and get the M-series.
January 19th, 2021 at 12:53 pm
@5 – 10 or 15 is a lot of cash for most people.
January 19th, 2021 at 1:08 pm
The vehicle is missing may parts but what is there has the makings of a 1909 Hupmobile two seat roadster.
January 19th, 2021 at 1:49 pm
6 Agreed 10-15k is a lot but with low rates and loans now going out 7 years its an additional $140 to $200 a month on the payment. Not like in years past when the performance brands were twice the price of the median model.
January 19th, 2021 at 1:50 pm
That BMW custom motorcycle looks like one giant step into the 30′s (no not the 2030′s, back to the 1930′s); I’m not digging it.
And the electric SUV (of BMW) looks sad as well; they need to make more M’s to help with paying for that electric (awful grille).
January 19th, 2021 at 1:53 pm
#5. Every purchasing contract has a clause that refers to “force majeure.” Sometimes it’s referred to as “an act of God.” My understanding is that if an OEM invokes a force majeure and cuts orders, a supplier is no longer obligated to fulfill the order.
OEMs never expected the market to recover as quickly as it did and now they’re shorthanded.
January 19th, 2021 at 2:05 pm
RIP Mustang
January 19th, 2021 at 2:08 pm
Exactly where are the chips used in production? Everything that comes to mind – radio, climate control, gauge cluster I would assume is produced by an outside supplier. So where is the shortage exactly for the manufacturer? This story left out many pertinent details.
January 19th, 2021 at 2:11 pm
4 BMW doesn’t use “M” near as loosely as Mercedes-Benz now uses AMG, but they seem to have added M to some of what once would have been sub-M cars. The M240i and M440i are much closer to real M cars than the AMG A35 and AMG CLA35 are to real AMG cars.
https://www.fueleconomy.gov/feg/Find.do?action=sbs&id=42925&id=42876&id=43148&id=42929
January 19th, 2021 at 2:15 pm
Is most of the chip shortage for proprietary devices, or “off the shelf” ICs?
12 A number of them are in engine control, air bag electronics, etc.
January 19th, 2021 at 2:18 pm
11 I agree, but if they are still selling, they can still change their mind, and keep building the current Mustang alongside the new electric Probe, or cancel or delay the electric one.
January 19th, 2021 at 2:35 pm
I seriously can’t believe Mustang will be EV only. At least not for another 15-20 years
January 19th, 2021 at 2:44 pm
Kit, an article that might interest you:
https://autos.yahoo.com/1994-plymouth-voyager-manual-transmission-145100625.html
January 19th, 2021 at 2:50 pm
10 Thanks John!
11,15 Also find it hard to believe the ICE Mustang only has 6 years left. I also found it odd that they announced production to start in December when typical model change-overs are done in July. Especially when they are this far out I would expect them to make the transition during the normal July shut-down.
January 19th, 2021 at 3:13 pm
17 Interesting. Thanks. My van is a 1989, the first of the two years you could get the 2.5 turbo with a manual.
I just learned something I didn’t know, based on your link and checking the EPA gas mileage site. You could get a manual in the 1995 Voyager, but 1994 was the last year for the manual in the Caravan. There was no manual in 1991, the first year of the 2nd generation vans, but it returned in ’92 for a few years. Except for ’89 and ’90, all of the manual Caravans were non-turbo 2.2 and 2.5 four cylinder.
January 19th, 2021 at 5:13 pm
That’s kind of humorous that Ford is saying they will start building a new, electric “Mustang” in December, 2028. Do they really even know what year they might do that, much less what month?
January 19th, 2021 at 6:51 pm
I see the transition from ICE to EV’s by the Detroit manufactures despite public preferences.
I think sizable risks are being taken to get out of the ICE business in the near future when EV’s have thus far generated a pitance of market share, ample charging stations do not exist in the US and the majority of promised upcoming EV’s remain years away or delayed one year then another.
How can they say the demand for ICE sedans has dwindled, when it appears the many cars that have had a faithful following were discontinued and replaced with those you would buy for your kids graduation or only suited as a city car.
I believe the informed majority doesn’t want an EV at this time and sees that EV’s are being shoved down their throats come hell to high water.
January 19th, 2021 at 8:51 pm
I’ll believe this 50% EV market share in 8 years when I see it. Not only is charging infrastructure horribly lacking, like at my condo, but can there be battery production capacity, and raw materials to make batteries for all of these cars, if half of global production is EVs? That’s 30-40M cars. After all, one EV uses as much battery as about 10,000 smart phones.
January 19th, 2021 at 9:47 pm
Well, in my opinion Ford Motor Co.has lost it’s mind when it comes to Mustang going ALL electric in ’08.First thing they already have the Mustang “Mach E” which is killing the Mustang legacy and to further Destroy the pony car legend going ALL electric is insane. Mustang IS NOT A GROCERY GETTER.It’s about Power & Sound.Mustang is a High – Performance car culture on it’s own.
Ford wake up before Henry turns over in his grave.
January 19th, 2021 at 10:07 pm
Chip shortage!!!
All Manufacturers should stop trying to bring our living room into our vehicles.We as consumers will have a choice to make real soon.There will be more chip shortages tomorrow .
January 19th, 2021 at 10:28 pm
23 Mustang is both a high performance car, and a styling exercise. There have been a lot of non-fast Mustangs sold over the years. In any case, announcing now that Mustangs will be electric in 8 years is insane, as was calling the upcoming lifted hatchback a Mustang.
Yep, sound is part of car culture, as sound is a lot of what makes old airplanes with Merlin V12s and radial engines so cool. With cars, I like hearing anything that you don’t hear very often, like Model Ts and Model As with their low rpm fours that sound totally different from today’s high rpm fours that make 5 times the power to displacement.
January 20th, 2021 at 8:11 am
We’ll see what happens with market share as Ford tries to give the impression they are the car manufacturer of the future and switch everything over to EVs regardless of demand. gm seems to be a little more cautious and has placed their hat into the ring but not gone as far as providing specific dates. Meanwhile FCA is throwing a hemi in everything and creating multiple variations.
January 20th, 2021 at 9:05 am
I am OK with an electric Mustang. Sound or no sound. I would have 2 problems with an electric mustang though.
Handling. These EVs generally have a low cg because the heavy batteries are near the road. However, the battery mass is substantial. Handling is not all about low cg. Mass is the biggest factor because that mass has to be coerced into changing directions. EVs have plenty of mass to go around. I found that the model 3 was about as good in high speed corners as the Dodge Avenger I rented years ago was. It is quite simply far too heavy.
Range on a track. Yes Mustang owners regularly use their cars on the track. It is where most of their mystique comes from. They are reasonably competent cars to take to the store and also capable to fly around the track on the weekend. EV range on a track is horrific. As horrific as your range is with Gas. The key difference is that you can bring a can of gas with you and be back on the track within minutes. Taking a 1 hour or more charge break during track day means your track day is over.
If they solve those 2 issues, then an electric mustang would be just fine. If they don’t; then I don’t see the point in a stylized grocery getter. There are plenty of stylized grocery getters on the market.