"It's 2022, get some chips already!"
We feel your frustration and if we had it our way the discussions surrounding computer chips and inventory delays would be a thing of the past!! We want to get our business partners and clients on the road with their new trucks as soon as possible. Business needs to keep on going and we all need the vehicles to drive us there.
There’s a lot more to the story behind why the microchips are still affected by the pandemic. After reviewing information from our Ford of Canada representatives and discussions with our commercial clients we’ve compiled some information to help shed light on what the current outlook is on semiconductor microchips and the delays in vehicle delivery.
What in the world is happening to cause such an issue with supply?
The demand for semiconductor microchips has been steadily increasing in general. The vehicle industry accounts for 10% of the microchip market but other industries like computer, cell phone and appliances also require these microchips and are competing for supply. They too are expanding their technology and with more gadgets comes more microchips.
A typical microchip order cycle is as long as 26 weeks. With consumer demand and competing industries the wait times are annoyingly long. Increasing production is in the works but incredibly time consuming and expensive. Texas Instruments is investing $30 Billion for 4 new chip plants in Texas making this the largest investment in Texas history. However, the new plants are not expected to be operational until 2025 which unfortunately means that the shortage of microchips is not going to see improvements until possibly 2026.
All chips are not created the same and the delay is not only for 1 chip!
Here’s a breakdown of what Ford is looking at to complete the build on an F150 with regards to microchips. Let’s start with a focus on the Body Control Module (BCM) which has around 1,100 electrical components.
Wow, hey? So, this is the breakdown for 1 body control module… how many modules are in a typical F-150? Approximately 170 modules and over half of these modules have experienced a shortage in the last 12 months. It gets more complicated because other parts that interface with the modules, like our BCM above, also need to have their own microchips to process and relay information.
So how many microchips does an F-150 have in total?
Approximately 1,500 microchips!! Okay, stop and let’s read that again. One-thousand-five-hundred chips in ONE truck. The reality is that most modern vehicles rely on semiconductor microchips, they will not run without them. Two-thirds of the microchip shortages have been on legacy chips such as the ones found in the F-150. To make things worse, they are not one-size-fits-all, different microchips have different functions. Here are some examples of the different chips in a vehicle.
Chassis: Steering/EPS, Brakes/ABS, Traction Control, Suspension, Chassis Control.
Power Train: Engine Control, Fuel Injection, Knock control, HEV/EV motor, transmission.
Infotainment: Dashboard, car audio, connectivity audio, GPS, Navigation Display.
Electronic System: Alternator, Battery, Starter, Lighting, Diagnostics.
Safety and Control: Airbag, TPMS, Collision warning, Park Assist, Back monitor.
Comfort: Power door, Power windows, climate control, mirrors, wipers.
That’s eye opening! At this point are you like us and wishing things returned to the good ol’ days when a truck was a simple machine? Give me something that tows and hauls, I can do without the fancy stuff! Right? Maybe not, let’s face it…. we all love the new technology in our trucks. Makes our days and work sites easier and more efficient.
Here’s what is happening next…
Ford Motor Company is on this like you wouldn’t believe. They have created several specific, task-force teams to tackle specialized areas surrounding the recovery of vehicle production.
Optimizing microchip usage: Identifying chips in critical shortage and relocating to other more vital areas when compatible.
Reviewing Supplier Chain Mapping: Identifying and mitigating future risk of shortages or delays
Leveraging Alternative Sources
Monitoring Non-Chip Parts Supply and Distribution: Shortages of any parts that aren’t microchips can cause delay in vehicle production.
What the LAND Automotive Group is doing…
The truth is, like you, the details surrounding these shortages are very much out of our control. However, maintaining our commercial and business relationships with excellent service and professional attention is what we will continue to do.
Our team will diligently monitor any vehicles we’ve ordered for our clients. We remain in communication with Ford, watching the status of your vehicle so we can be open and honest about real timelines and expectations. The wait times for some models will be several months if not potentially years. As we navigate these delays, we can help you plan and prepare.
Also, more importantly, we do not price gouge despite the shortage. We’ve always promised integrity and transparency. We will continue to honour X-Plan pricing. Our team is committed to getting through these challenges together and stronger with our client’s success as our top priority. Reach out and let us help you to drive your business in today’s modern economy.