In the past few months, manufacturers have been forced to increase the price of their electric vehicles due to a global chip shortage. Unfortunately, it's not just electric vehicles that have been affected but even smartphones, laptops, and gasoline vehicles.

The question is, when can we expect the global chip shortage to end? Let's find out!

What Caused the Global Chip Shortage?

close up shot of RAM chip

The Covid 19 pandemic is one of the reasons that triggered the global chip shortage. Besides that, there was a higher demand for consumer electronics after most people were forced to work from home, which meant that more chips were required than initially produced. Even NVIDIA admitted that GPU demand would continue to outstrip its supply, and Sony is having the same problems with PS5 stock shortages.

On top of that, it's apparent that the Russia-Ukraine war worsened supply chain issues and created other issues relating to power and energy demands.

When Will the Global Chip Shortage End?

tesla model x charging at supercharger
Image Credit: Tesla

According to top industry insiders, the global chip shortage could continue until 2024. Talking to CNBC, Intel CEO Patrick P. Gelsinger stated his belief that the semiconductor shortage will not be sorted out in 2023. Previously, the Intel CEO said the global chip shortage could take years to resolve.

That’s part of the reason that we believe the overall semiconductor shortage will now drift into 2024, from our earlier estimates in 2023, just because the shortages have now hit equipment and some of those factory ramps will be more challenged.

Similarly, Volkswagen expects the chips to be in short supply throughout the year (via Automotive News Europe). However, the chairman of ABB, a Swedish-Swiss engineering company, told CNBC that more semiconductors could be available in 2023 compared to 2022. This is plausible, considering that it's now easier to buy a PlayStation 5 than in the past two years.

President Joe Biden also approved the CHIPS and Science bill that commits billions of dollars to resolve the semiconductor shortage. In addition to that, the Joe Biden administration introduced a new federal tax credit to reduce the cost of electric vehicles manufactured in the U.S.

How Has the Global Chip Shortage Affected the EV Industry?

A Tesla Cybertruck on a highway with mountain in the background
Image Credit: Tesla

The global chip shortage is one of the reasons why the Tesla Cybertruck production is taking longer than expected. In fact, if you're buying a new EV model that is already in production, you could be forced to wait a few months for delivery. However, if you've pre-ordered an electric vehicle, but the delivery is taking too long, you could consider an EV subscription.

The prices of new electric vehicles have also increased by over 10% over the past two years. Similarly, if you're buying a used electric vehicle, you could end up spending 54% more money than you would two years ago.

However, the silver lining is that you could get a tax discount of up to $7,500 if you're buying a new electric vehicle if the model is eligible for EV federal tax credit. In addition to that, Tesla slashed the prices of the Model 3 and Model Y to make the cut for the federal tax credit. Reuters reports that Ford has also employed Tesla's strategy by reducing the price of its Mustang Mach-E by up to $5,900.

Despite the global chip shortage, electric vehicles could be cheaper in 2023 than in the past two years since more manufacturers are willing to slash prices to be eligible for the EV tax credit. Nevertheless, it could be a while before you can order a brand-new EV model, and it arrives in a few days.

Electric Vehicle Production Expected to Increase

The global chip shortage could be over by 2024—that's the best-case scenario. However, it could take longer than that to be resolved.

On the bright side, electric vehicle production is expected to increase significantly over the next few months despite the global chip shortage. For now, we have our fingers crossed that it will be over by the end of 2023.