Car manufacturing hit by global semiconductor shortage
ft.com
ft.com
Once they crash the car and build the car to conform to the regulatory framework - the manufacturer of the parts in the car can't change. You must use the same Nippon semiconductors etc.
That's the simple explanation I was told.
https://en.m.wikipedia.org/wiki/Production_part_approval_pro...
I'm guessing one advantage Tesla has over traditional automakers is their entire company has been built around the existing regulatory environment. I'd be willing to bet their recertification process is quite streamlined compared to companies that have iteratively patched it on to their tradition vehicle design processes. Just a guess though; I have no background knowledge on this topic.
I highly doubt that the traditional carmakers are slowed down by regulations.
Would be cool to find someone who has actual insights to ask this.
You can generally tell what revisions are straight-forward to certify and which are not by noting common year-to-year changes in a model.
The recall I can find is to replace 3 bolts that can corrode due to salt which would cause loss of power steering.
I’m not sure what runaway power steering is?
It's 100% a design fault, and applies equally to any car of this model (I tested it on a friends, same result!). There are simple reproduction steps which can totally happen by accident, yet there has been no recall or service bulletin issued.
I ended up pulling the power steering controller apart and adding my own safety circuit to the microcontroller output so my car is now the only car of this model which won't break your thumbs or steer you into a ditch!
I've noticed that automakers are about 60 years behind aircraft makers in design methodologies that prevent things like hardovers due to single component failures.
I'm not exaggerating about the 60 years thing. I worked in Boeing engineering 40 years ago and the "no single component failure causing a crash" was the rule and literally the law.
(A lesson Boeing had to relearn with the 737MAX MCAS system.)
Nuclear reactors (Fukishima) and drilling rigs (Deepwater Horizon) are far behind, too.
So park the car for a few months, then go to unpark it on a cold night... Not at all rare!
(I work in a regulated environment, but not automotive, and we run into the same barriers, often for even minor changes. We work agile, but changes will get released in planned batches every few months, rather than shipping instantly. For automotive, I'm guessing their update cadence would be every model year.)
Building things which can have small defects that kill people is just a different game.
E.g. there are these additinonal brake lights one could place at the top of the rear window. For a long time it was illegal to use them, even if you just glued them on the inside
Obviously, if the aftermarket product puts other people at risk, then the consumer who did the modification would be legally liable
[1]: https://www.carscoops.com/2020/09/the-tesla-model-y-has-biza...
But its probably that there is just no alternatives on the market, since Ties Ones have extensive supply chain management with second and third sources for the majority of semiconductors.
1: https://www.zvei.org/en/subjects/mobility/product-process-ch...
E.g. when the AKM plant recently burned down this already was havoc for a lot of audio applications. I'd guess that at least 15% of all cars in the >35kUS$ range use one or more AKM ICs. Unless car manufacturers (or their suppliers) have enough stock of AKM ADCs and DACs (or assembled ECUs), they have to either stop delivering they're more expensive cars - or adapt their hard- & software to use other ICs (or get questionable stock at inflated prices, which might be an expensive option if you're building millions of cars, and expensive again if those IC have a higher failure rate due to bad storage/being recycled/...). With the tendency to do as much as possible as jit, I doubt they can bridge the duration until the production ramped up again.
*) Regarding settings, I'm a opponent to "control every little thing with the touch screen" and don't buy cars with this safety hazard. However, I can adjust the a lot of "offline" settings in mine. Toggle adaptive head lights, lane departure warning sensitivity, registered keys, and a many more features one does NOT change during driving.
I used to work at a kiosk manufacturer that would do the complete hardware design, fabricate it, put it on a truck and drive it around the city for a week straight, and then make sure nothing was broken. This was to ensure that it wouldn't break during shipping to the customer. After that, not even a zip tie was allowed to be changed.
In our case, our development process was such that the software engineers didn't get ahold of it until afterwards. One time we built a machine with an internal cable that was too long and so its baud rate was too slow to perform to the customer's spec. Rather than incur the cost of re-testing with a different cable, the company spent two years trying to get the customer to accept a slower machine. Fun times.
Although looking now for that part at least the shortage seems to be easing - there are about a dozen showing up as available across a few places on Octopart and the lead time seems to have dropped back to eight weeks.
Btw, another interesting ramification of both the trade war with China and the travel restrictions is that a lot of low/mid scale electronic manufacturing is being moved to Mexico.
That's a first I have seen manufacturers moving to a country with similar wage levels. Last I heard, wasn't a lot of manufacturing shifting to Vietnam, Malaysia and to some extent, India?
2019 was expected to be a "peak" year in the automotive cycle, so everyone in the supply chain adjusted accordingly by modeling in lower demand following that peak. I'd wager with COVID-19 the trough came significantly faster (and deeper) than anticipated, and as we gear up for an equally fast (expected) recovery, inventory levels aren't adequate.
Just a hypothesis, but perhaps worth considering.
At the end of 2020 it seemed like the inventory problems for new cars might be coming to a close in early 2021, but if this shortage of semiconductors is real then maybe early 2021 still won't see new and used car prices come back down for a bit longer.
"From an automotive standpoint, dealership inventory remains lean – currently sitting at a nine-year low and down 22% for year-ago levels – which has already led to some reversal in the very generous summer incentives", which indicates higher prices. I couldn't find pricing data.
This new shortage + current shortages + low interest rates = high prices on used/new. I was thinking of buying something last year, but now I think I'll wait until '22 or '23. (or if I can WFH, never!)
I guess I'll be holding onto my 2011 Honda Odyssey until it catches fire on the road.
Meanwhile those who did lose their jobs are screwed. These people were probably also poorer before COVID hit, so fewer of them would have bought a new car absent COVID anyways.
This is also why the stock market can't seem to crash; bond yields are super low, and there is more money being saved (and thus looking for investments) than ever.
That's been the problem in the US for the past 45 years or so. We have a lot of wealth, it's just not particularly evenly distributed. Every single financial shock in my lifetime has made the problem worse.
Good luck, I bought a 2005 toyota corolla with the idea of driving it until it died. I am now concerned the car will bury me instead.
No that's the toyota krushchev
1. average US houshold income is very high
2. cars are a must (both for cultural and practical reasons), not a luxury
Yes, in times of job loss and other economic strain consumers will stop buying certain things, but likely not cars (at first).
https://www.cargurus.com/Cars/price-trends/ is a good reference for following used car pricing trends. All signs point to them going up and barely flattening now.
C4C effected 700k cars from the 90s, all of which were worth less than $3,000. There were, at the time, roughly 250 million registered vehicles on the road. There's absolutely no chance that this had any effect what-so-ever on the market for used cars. 700k is literally a rounding error when compared to 250 million.
What hurt the used car market was the fact that new car sales fell from roughly 15 million a year in 2008, to 9 million a year a year in 2009. It took until 2015 before cars sales reached that of 2008.
All told 40 million fewer cars were produced between 2009 and 2015 compared with how many would have been produced if not for the GFC.
Those 40 million cars that were never produced are what caused used car prices to spike. Not the 700k Ford Windstars and Explorers lost to C4C. Anyone who tells you different is a fool.
From time to time there will be a showroom car on sale that matches, especially if you’re near the end of that generation
But why do you think the system is setup this way? Car dealerships in the US having more money (or financing access) to keep stocks than other parts of the world? US customers wanting instant gratification for their purchase? (although, likely, anyone likes that over delayed car delivery, it's just that once you get used to instant car delivery is hard walk away from it)
I did get rejected by Audi when I wanted to order a car in a special paint color. They advertised "any color you want, just $2500 extra". When I tried to take them up on it, the reply was, "We don't know you, your dealer isn't a top performer, and our custom paint shop is booked up over a year anyway. So kindly bugger off."
Presumably, no one pays anywhere near MSRP for that model unless they custom order from the factory.
I’m sure it varies from manufacturer to manufacturer, but still.
The price of land seems to be a good starting point to explain the difference
"Industry officials say semiconductor companies diverted production to consumer electronics during the worst of the COVID-19 slowdown in auto sales last spring. Global automakers were forced to close plants to prevent the spread of the virus. When automakers recovered, there weren't enough chips."
So it should be temporary.
“The problem is, we are lower in the chain than companies like Apple and HP,” said one executive. “The automotive industry doesn’t pay that much for its semiconductors.”
It would not surprise me to find out that Apple makes more money per iPhone manufactured than Toyota does per Corrolla, but I could definitely be wrong about that.
I live in Europe and keep pondering moving to a bigger city and downsize just to give up the need of a car since the maintenance and the rest of the costs are going up faster than my pay. I can see a lot of low-middle class people getting screwed by the rising costs of car ownership long term.
>However, I think the weakness in electrification and software makes it clear that there's little true innovation. Legacy automotive turned into a stable market, and participants were happy to fight over pennies
If you sell millions of cars you can hire a whole team of penny pinchers who will then save your business 10s of millions dollars. Every penny pays for a $100k salary.
If anything the semi conductor shortage is causing downstream issues in VW's ability to produce more ID.3s.
There's also a whole lot of other chips in cars these days.
e.g., the replacement cost of a control board in my furnace is around $800, IIRC. I could probably build it for about $30 in parts (ignoring the software in the microcontroller). However, to someone who's evaluating buying a new furnace vs. repair, that $800 is a hell of a lot cheaper than a new furnace.
1) Covid hits and sales and demand for new cars drop. 2) Automotive Industry cancels a load of silicon orders. 3) Covid hits and there is a surge in demand for replacement/upgraded IT equipment. 4) Silicon Fabs adapt and take up the slack / Re-Tool 5) Automotive experiences a sudden surge 6) Silicon Fabs go - Uhmm yeah, you are going to have to wait.
[Hit the FT Paywall so am not commenting directly on the linked article]
The distinction I'm drawing is hand-wavy, but the point is that it's a planning disruption rather than a resource limit or whatever.
I'd compile some examples for you, but I'm not sure how you'd interpret it :)
The lane assist and brake assist - along with adaptive cruise control - are great systems that also increase safety, if used properly. The difference in fatigue alone that these systems contrubute to is (anecdotally from my experience) night and day.
I believe that the improved safety is worth the increasing complexity of maintenance.
Always-late inventory.