GM to make substantial changes to supply chain as a result chip shortage

General Motors’s Chief Executive Mary Barra states that the company will make substantial changes to its supply chain. The changes come as a result of continuing semi-conductor chip shortages. It already has forced significant production costs.

Image credits- Fortune

Barra said in an online interview, “We’re going to make some pretty substantial shifts in our supply chain. We’re already working much deeper into the tiered supply base because generally, General Motors doesn’t buy chips (directly) but (our suppliers do). But now we’re building direct relationships with the manufacturers.”

Further details about the changes were not revealed by the company. In the US, next week there is a meeting on-chip crisis planned by the White House and the US commerce department. The production cut isn’t just within General Motors manufacturing plants, but all the automakers working towards EV manufacturing.

GM mentioned that they are cutting production costs in its six North American assembly plants as a result of the semiconductor chip shortage. This year, many production plants under General Motors had to halt their operations. Additionally, as recent as last month, its North American assembly plant also had to temporarily halt production.

Chrysler parent Stellantis is another automaker that had to cut production costs in three of its plants in both Canada and the US. Barra stated that the issue is “a solvable problem, but it’s going to be here a little longer.”

Increasing demand for EVs

In addition to automakers ramping up the production of EVs, the awareness of EVs is increasing. Upcoming electric pickups by Tesla ad Ford have picked up a lot of attention among customers. As Rivian recently started rolling out the first electric pickup in the industry, customers are also looking forward to other models.

Recently, in an interview by Delta Air Lines chief Ed Bastian with fellow CEOs, GM CEO talked about the need for more chips. Barra said that GM vehicles have more chips than other vehicles by 30%. Later added, “As customer needs are shifting, we need more and more semiconductors.”

Barra added that they are looking for short, medium, and long-term solutions for the semi-conductor shortage issue. Last week, the automaker’s outlook for this year by GM Chief Financial Officer Paul Jacobson stated that they are expecting a “more stable year” for 2022. It was in reference to the semi-conductor shortage. Additionally, Jacobson also cautioned that GM’s third-quarter deliveries could be down by 200,000 vehicles.