Problems in car industry – level 3

18-05-2021 07:00

The global semiconductor chip shortage will cost automakers 110 billion dollars in lost revenues this year, up from a previous estimate of 61 billion.

According to a consulting company AlixPartners, the crisis will hit the production of 3.9 million vehicles.

Volkswagen, Ford, and General Motors are just some of the big names to cut or suspend some output. Honda is the latest company that is paying the price for the shortage of computer chips. On Friday, the Japanese company said that it affected 100,000 vehicles last year, and the problems will likely persist through 2021.

Automakers have been reluctant to make long-term commitments on chip supply for fear of being stuck with financial issues over such agreements. Now, companies will have to respond by building stronger ties to chip makers. Last week, Ford said it was redesigning some parts to use chips that were more readily available.

Difficult words: semiconductor (a material that allows electricity to move through it more easily when its temperature increases), revenue (income or money you make), output (the amount of something produced by a particular company or industry).

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