Supply chain professor says auto industry adapting after chip shortages

“The auto companies were focusing on their more profitable vehicles and not building as many … less profitable vehicles because of the parts shortages, especially in chips,” Golicic said.

To avoid another global chip shortage, Golicic said the auto industry has been working to develop additional chip suppliers and to build new plants and diversify their locations to be able to get those parts when needed.

“The auto industry has a lot more inventory of finished cars and so the waits are not quite as long,” she said.

Golicic said wait times for electric vehicles are the exception, “because there are still issues with the manufacturing of the batteries.”

However, customers wanting to purchase EVs are used to production delays.

“If they’re told instead of four months it’s going to take six months, that’s not a difficult pill to swallow for [EV] consumers,” Golicic said. “They still want them and are still demanding them.”

EV manufacturers are providing more options, and those that didn’t produce EVs are “working on coming out with an electric vehicle,” she said.

Are EV manufacturers profitable? Golicic said it depends.

“It really comes down to, do [EV manufacturers] have great processes in place to get all of that profitability?” she said. “It depends on if they made smart decisions in ordering their parts and getting what they need. Did they have to expedite anything, because those kinds of things eat into their profits?”

Many of the metals that go into the batteries are coming from developing countries, including nations in South America and Africa, Golicic said.

“We’re in an era of people wanting to know what’s going on in the supply chain, and they want to know, ‘Do you have visibility of your suppliers and upstream [of] all the tiers, and do they have good practices?’ because obviously the first bad practice that is known makes it into the media and then you’ve got a PR issue on your hands.”