The ongoing semiconductor chip shortage is now expected to cost the worldwide automotive industry $110 billion in revenue in 2021, in accordance to consulting agency AlixPartners.

The forecast is up by 81.5% from an preliminary forecast of $60.6 billion, which the New York-based agency launched in late January when the elements downside began inflicting automakers to minimize manufacturing at vegetation.

Mark Wakefield, international co-leader of the automotive and industrial follow at AlixPartners, mentioned numerous components have contributed to the rise, together with a fire at a plant near Tokyo for chip provider Renesas and weather-related kinks in the automotive provide chain.

“The pandemic-induced chip disaster has been exacerbated by occasions which are usually simply bumps in the street for the auto industry, similar to a hearth in a key chip-making fabrication plant, extreme climate in Texas and a drought in Taiwan,” he mentioned in a press launch. “But all this stuff at the moment are main points for the industry — which, in flip, has pushed residence the necessity to construct supply-chain resiliency for the long run.”

AlixPartners is forecasting that manufacturing of three.9 million autos shall be misplaced this yr on account of the shortage. That’s up from January’s forecast that estimated the shortage would minimize manufacturing of two.2 million autos.

In the U.S., the shortage has brought on the Biden administration to order a 100-day review of U.S. provide chains. About $50 billion of President Joe Biden’s $2 trillion infrastructure proposal is also earmarked for the American semiconductor industry.

Automakers similar to Ford Motor and General Motors count on the chip shortage to minimize billions of their earnings this yr. Ford mentioned the state of affairs will decrease its earnings by about $2.5 billion in 2021. GM expects the chip shortage will minimize its earnings by $1.5 billion to $2 billion.

Semiconductor chips are extraordinarily essential parts of recent autos for areas like infotainment programs and extra primary elements similar to energy steering and brakes. Depending on the automobile and its choices, specialists say a automobile might have tons of of semiconductors, if no more. Higher-priced autos with superior security and infotainment programs have way over a base mannequin, together with various kinds of chips.

“There are up to 1,400 chips in a typical automobile right this moment, and that quantity is barely going to will increase because the industry continues its march towards electrical autos, ever-more related autos and, ultimately, autonomous autos,” Dan Hearsch, a managing director in AlixPartners’ automotive and industrial follow, mentioned in an announcement. “So, this actually is a important challenge for the industry.”

AlixPartners expects the biggest impression to manufacturing in the second quarter after which progressively get higher in the course of the second half of the yr and into 2022, Hearsch informed CNBC.

“By Q3, there’s sufficient to get all people again up and operating for essentially the most half,” he mentioned. “And then in This autumn, we should always get buzzing once more after which subsequent yr get again to regular, hopefully.”

That does not imply provide constraints shall be fully solved subsequent yr, however Hearsch mentioned automakers ought to have sufficient semiconductors to produce as many autos as they need.

The international automotive industry is a particularly advanced system of outlets, automakers and suppliers. The final group consists of bigger suppliers similar to Robert Bosch or Continental AG that supply chips for his or her merchandise from smaller, more-focused chip producers similar to Renesas or NXP Semiconductors.

Much of the issue begins on the backside of the availability chain involving wafers. The wafers are used with the small semiconductor to create a chip that is then put into modules for issues like steering, brakes and infotainment programs.

The origin of the shortage dates to early final yr when Covid caused rolling shutdowns of car meeting vegetation. As the amenities closed, the wafer and chip suppliers diverted the elements to different sectors similar to shopper electronics, which weren’t expected to be as harm by stay-at-home orders.

Hearsch mentioned the highest precedence for corporations proper now’s “mitigating the very best they will the short-term results of this disruption,” which can embrace all the things from renegotiating contracts to managing the expectations of lenders and traders.

Stellantis CEO Carlos Tavares mentioned the automaker, which was fashioned in January via a merger between Fiat Chrysler and French automaker PSA Groupe, is not ruling out methods to be repaid by suppliers for the elements downside.

“It’s too quickly to say. We do not know but the whole of the monetary impression … It’s going to be huge,” he mentioned Wednesday in the course of the in the course of the Financial Times Future of the Car Digital Summit. “But it is clear that it is a aggressive sport … we is not going to exclude that chance.”