What’s ahead for the auto industry in 2022?

From shortages of crucial semiconductor chips to shutdowns at major assembly plants, as well as skyrocketing car prices and empty dealerships, 2021 was a year to remember for auto manufacturers and consumers alike. But there were also a surge in sales of electric vehicles and an increasing shift from sedans to SUVs and pickup trucks.

So what’s ahead for 2022? By some accounts, it may be more of the same, as shortages continue to leave dealers struggling for inventory and consumers facing ever higher prices. But shoppers will also find a lot more options if they’re looking for electric vehicles.

Here are the storylines we expect will dominate this year:

Ongoing product shortages

As Covid-19 struck, automakers slashed production and parts orders. But when sales started to rebound, they discovered they couldn’t get all the semiconductors they needed, leading to major production cuts. The industry lost around $210 billion in revenue in 2021, according to AlixPartners, a business management consultancy. While chip supplies are loosening up, they’re far from back to normal, and production cut be hurt well into 2022. Worse, the industry faces other shortages affecting products like tires and interior plastics and seat foams.

All told, automakers worldwide produced about 8 million fewer vehicles than planned last year because of product shortages. Even if production rebounds, dealers won’t be able to build back inventories until well into 2022, J.D. Power analyst Tyson Jominy said. As a result, buyers should expect limited choices — while prices will continue to rise at a record rate. At the end of 2021, a typical new vehicle cost $45,000, up about $8,000 from December 2020, according to industry data.

Normalization of online car buying

When the U.S. went into lockdown, the industry hit upon a novel idea. Because customers couldn’t go to dealers, dealers went to them — over the internet. Even after the country opened back up, more and more customers are shopping for their cars online, and many retailers schedule test drives and deliver new vehicles to buyers’ homes or offices. Meanwhile, with showroom lots nearly bare, normally impulse-driven motorists have begun ordering their cars and waiting — sometimes for months — to take delivery.

EVs start their move into pole position

They account for a modest fraction of U.S. new vehicle sales, but demand for battery-electric vehicles doubled during just the first half of 2021. This year could bring the “tipping point,” GM CEO Mary Barra said, with the EV market exploding. Several factors will play a role, starting with a plethora of new offerings: Analysts anticipate the number of long-range models will quadruple this year.

The impact of Build Back Better

President Joe Biden has put a lot of emphasis on the auto industry. In December, the White House announced its most aggressive fuel economy standards, and Biden has said he wants to see EVs account for up to 50 percent of U.S. sales by 2030. His infrastructure bill delivers funds for a nationwide charging network. But other funds, including money to boost EV sales incentives, are currently stalled in Congress. 

Startups will continue to…

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