COVID-19

There aren’t enough computer chips to power modern cars

image of two employees, separated by plastic hygiene protection, working in car manufacturing during COVID-19

A lack of computer chips means that car companies have not been able to meet production demand. Image: REUTERS/Andreas Gebert

Sean Fleming
Senior Writer, Formative Content
Share:
Our Impact
What's the World Economic Forum doing to accelerate action on COVID-19?
The Big Picture
Explore and monitor how COVID-19 is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:

COVID-19

  • Global car sales fell in 2020.
  • A shortage of computer chips is compounding poor sales by holding up production.
  • That could cost the industry $60 billion.

Besides reeling from the impact of the COVID-19 pandemic, the motor sector now faces another major challenge – it can’t get all the computer chips it needs.

Modern cars are reliant on technology. There’s software that monitors engine performance and emissions, cruise-control that automatically adjusts to keep pace with the speed of the vehicle in front, alarms that are triggered by straying out of lane - not to mention bluetooth connectivity, parking sensors, keyless entry and a host of safety features.

And that’s just in a conventional car. Self-driving and semi-autonomous cars are even more tech-laden.

Have you read?

Chips with everything

The global shortage in supply of semiconductors has caused headaches for other sectors too: from mobile phones and games consoles to 5G-ready industrial and commercial equipment.

Apple faced potential production challenges to its new iPhone 12 model last year, according to Bloomberg. The handset is one of the latest generation of 5G-enabled phones. While shortages of consumer technology grab headlines, a lack of chips risks exacerbating other issues.

As one of the keystones of the Fourth Industrial Revolution, technology like 5G play an important part in helping some of the UN’s Sustainable Development Goals come to fruition. Several of the SDGs are dependent on technology, like Good Health and Wellbeing (SDG3), Industry, Innovation and Infrastructure (SDG9), and Sustainable Cities and Communities (SDG11).

Discover

What is the World Economic Forum doing about the Fourth Industrial Revolution?

Pre-pandemic, global car sales were on track to be around 80 million vehicles for 2020. But that is expected to have fallen to 64 million, according to Statista.

“South America and Europe were among the hardest-hit regions, with auto sales in these regions contracting by about one-fourth year-on-year,” the data journalism site says.

a graph showing the number of cars sold worldwide between 2010 and 2021
Global car sales slumped in 2020. Image: Statista

That situation has been compounded by the lack of available chips, meaning cars aren’t rolling off the production lines fast enough and therefore aren’t being sold.

The damage done to global car sales by the lack of technology components is estimated to be around $60 billion, according to a report from CNBC.

“All the way up and down the supply chain, everybody is out some portion of money,” Dan Hearsch, a managing director at consulting firm AlixPartners told CNBC. “This could be 10% of global demand this year, its impact, which craters the recovery. We don’t think we’re overstating this.”

Loading...
Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Share:
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

Winding down COVAX – lessons learnt from delivering 2 billion COVID-19 vaccinations to lower-income countries

Charlotte Edmond

January 8, 2024

About Us

Events

Media

Partners & Members

  • Join Us

Language Editions

Privacy Policy & Terms of Service

© 2024 World Economic Forum