General Motors, or GM, has temporarily stopped production at six of its factories in North America due to the ongoing global chip shortage.
GM is the latest automaker to be affected by the lack of important computer chips needed in vehicles.
GM Shuts Down Factories
GM, the parent company of GMC, Chevrolet, Buick, and Cadillac, announced that four of their US-based factories are affected by this crisis, according to CNBC.
The factories temporarily closed down are in Fort Wayne, Indiana; Spring Hill, Tennessee; Wentzville, Missouri; and Lansing, Michigan.
Four other factories in Canada and Mexico will be closed down for several weeks as the automaker imports its supply of chips. The sudden halt in production will affect the company's profitable vehicles, including SUVs and pickup trucks.
Also Read: Chip Shortage is Expected to Cause Major Price Hikes on Gadgets and Other Tech Products
A spokesperson for the company stated that during the hiatus, they would repair and ship all the unfinished vehicles to dealers to help meet the customer demand for their products.
Even though the situation remains complicated, they are confident that their team will be able to find solutions to minimize the impact on their vehicles.
The affected vehicles include Cheyenne, Chevy Silverado, Equinox, Traverse, Express, Sierra, Savana, GMC Acadia, Terrain, Canyon, Cadillac XT5, Cadillac XT6, and Buick Enclave.
This marks the second time that the automaker had to temporarily halt all activities in their factories due to the chip shortage. GM is the largest in North America.
GM is not the only automaker that is feeling the effects of the shortage of semiconductor chips. Unfortunately, the shortage is showing no signs of improvement anytime soon, according to Reuters.
Every automaker had to halt production and even temporarily shut down factories due to this crisis, including Ford, Toyota, and Volkswagen.
In April, Ford shut down its factory in Chicago and Kansas due to the chip shortage.
Even Tesla had to rewrite the software of its vehicles in order to support alternative chips. Elon Musk, Tesla's CEO, stated that the global chip shortage situation remains serious.
During an earnings call, GM executives did not specify how much production they expect to lose during this crisis.
CEO Mary Barra said that several teams are working on transferring the chips from vehicles and smaller SUVs to bigger pickup trucks, bigger SUVs, and new electric cars.
The shortage will cost GM $1.5 billion in earnings before taxes due to lost production, according to ABC News.
Analysts believe that the chip shortage may continue until 2023.
Importance of Chips
The semiconductor chips, also called microchips, work as the brains of vehicles. They are small devices that have billions of transistors, but the size of the chip varies.
The construction of these chips involves numerous steps that take days to complete, which is why chip manufacturers can't just produce thousands in a day.
The chip shortage began in 2020, but the demand for the chips exceeded the supply even before the pandemic.
Economist Rory Green called the chips the "new oil" and that South Korea and Taiwan are the ones who control the production.
While the chips were invented in the United States, several U.S. manufacturers creating them declined over the past decades.
In 1990, 37% of chips were made in the United States, according to James Lewis, the senior vice president of CSIS's Strategic Technologies Program. However, by 2020, only 12% of chips are manufactured in the country.
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Written by Sophie Webster
