Lack of cores cost the world 3.9 million less cars produced, or more than $100 billion

Global auto production will fall by 3.9 million units this year due to chip supply shortages, with a potential loss of $110 billion, an 81.5 percent increase from the $60.6 billion the firm predicted at the end of January, according to the latest forecast from consulting firm AlixPartners.

Mark Wakefield, global co-head of Arrow Platinum’s automotive and industrial business, said the chip production cycle is too long, Japanese chip supplier Renesas Electronics (Renesas) a factory fire near Tokyo and the U.S. Texas winter snowstorm and other unexpected factors, together led to this year’s chip shortage phenomenon.

Affected by the chip shortage, including Ford, General Motors, Stellantis and other automakers have been forced to stop production for days or even weeks.

Arrow Platinum forecasts that global vehicle production will fall by 3.9 million units this year due to the chip supply shortage, 1.7 million units more than the 2.2 million units forecast at the end of January, up 77 percent.

Dan Hearsch, managing director of Arrow’s automotive business, said that an average car currently uses up to 1,400 chips, a number that will only increase in the future.

Global automakers have also warned about the chip shortage in recent earnings reports, saying that the chip shortage problem is likely to worsen in the future.

Ford CEO Jim Farley previously said in a quarterly call, as the chip shortage may further worsen, Ford’s planned production in the second quarter will be forced to reduce 50%, much higher than the 17 percent drop in the first quarter. The company is redesigning its cars to use the most common and available chips today.

However, the reduced supply of cars has led to an increase in profit per vehicle.

Farley said Ford will keep its vehicle inventories low to boost its per-vehicle profit amid the impact of the Chinese Communist virus outbreak and chip shortages. For the first quarter, Ford recorded net earnings of $3.3 billion, or 81 cents per share, well ahead of market expectations (21 cents) and a record since 2011.

Arrow Platinum expects that vehicle production will be most affected in the second quarter and will likely gradually improve in the second half of this year until 2022.