Wed. Oct 27th, 2021

Essentially, the electric car revolution is here. It will be costly and inconvenient. It will open up vast prospects for all types of investors. Jim Collins, a Real Money contributor, believes it will come mostly from the mainstream market, which EVs have thus far completely neglected.

“Elon Musk can put a guy in a robot suit on stage at Tesla’s (TSLA) – Get Tesla Inc Report AI Day and get all the attention, but the transition to electrification won’t be that easy. Also, critically, it won’t be limited to Tesla’s existing lineup of entry-luxury and premium vehicles,” Collins recently wrote in Real Money.

According to Collins, the transition to electric cars is considerably larger than any single corporation. “What I’m describing here is a procedure. The process of moving away from internal combustion engines and toward battery-powered cars. This is a massive, worldwide process that is going to cost trillions of dollars. Governments will subsidize part of it, but true innovators will provide the actual economic value (and, probably, share price appreciation).”

However, the COVID-19 epidemic has harmed assembly lines which are located in Southeast Asia, causing a global semiconductor shortage that has lasted for over a year. Automakers are being forced to decrease production due to delays in Vietnam, Malaysia, and the Philippines. This is due to the fact that the chips are required for future generations of automobiles that demand computer capability.

The White House was able to hold its second semiconductor conference in 5 months, with Intel (INTC, General Motors (GM), Ford (F), Apple (AAPL), Microsoft (MSFT), Samsung, and others in attendance. According to the Washington Post, the White House urged corporations to clarify market supply and demand during the discussion. According to the Post, chip shortages are anticipated to cost the auto sector $450 billion in worldwide sales by the end of 2022.

Pat Gelsinger, the CEO of Intel, the United States’ largest chipmaker, has predicted that shortages will endure until 2023. Elon Musk, the CEO of Tesla, is unconcerned about the semiconductor shortage stifling auto manufacturing, saying the problem will be resolved in a “short time.” Musk’s optimism stems from the anticipated output of new semiconductor facilities that are either being built or planned. According to Reuters, Musk remarked during a joint sitting with Stellantis (STLA); Get Stellantis NV Report Chairperson John Elkann as well as Ferrari (RACE); Get Ferrari NV Report Chairperson John Elkann at the Italian Tech week, “There are a lot of chip fabrication plants being built.” “By next year, I believe we will have a great capability for providing chips.”

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