The Chip Shortage Might Not Last as Long as Some Thought
GM had its best year yet in 2021, despite the microchip shortage. What does the auto giant plan to do with its extra cash?
Written by Andrew Koole
Reviewed by Kathleen Flear
The chip shortage was the bain of the auto industry’s existence in 2021. The lack of semiconductors forced companies to slow production, cut trim levels, and delay the release of new models.
Chip manufacturers said they expected the shortage to affect new cars until some time in 2023, but recent reports from General Motors (GM) already indicate a light at the end of the tunnel.
In a statement about its year-end profits, the company claimed that chip supplies are improving and that vehicle production should be back to normal by the second half of 2022—good news for its
electric car
plans. Jerry
took a closer look to find out what was what.GM says 2022 looks promising
GM increased its profits by 55% in 2021 compared to the previous year, giving the company its best year ever. That’s surprising, since the
New York Times
says the company sold 3.4 million fewer vehicles than it did in 2020. It turns out, the strategy to triage available microchips to the higher-end and most popular models was the right way to go. The plan helped GM make $10 billion for its shareholders.
CEO Mary T. Barra sees the record-breaking year as good indicator for the months to come. She says the company expects to repeat 2021’s success, making between $9.4 billion and $10.8 billion by the end of 2022.
MORE: The Long-Term Effects of the Chip Shortage
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Will GM’s upcoming EVs keep the ball rolling?
Part of this year’s success depends on the reception of GM’s upcoming EVs like the GMC Hummer EV, Chevy Silverado EV, and Cadillac Lyriq. The company’s new electric platform, the Ultium, will power the new models.
The Hummer EV was expected last year already. But like many new models set for 2021, production was delayed. Now that chip supply is starting to improve, access to the electric SUV should be much easier.
Access to chips might also be what gave the company the confidence to grow its list of expected EVs. Electric versions of the Chevy Silverado and GMC Sierra were already in the cards, but GM recently revealed plans to offer two electric SUVs from Chevy by 2023 as well.
How will increased chip supply affect car insurance?
The prioritization of higher priced models in 2021 made of an expensive year for anyone buying
car insurance
for a new car. Premiums always go up along with trim levels, so it’s not a surprise that average rates went up.A return to normalcy in the supply chain might help bring average rates closer to what they once were, but that all depends on what automakers do with their microchips. Emphasis on electric cars might keep averages high.
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