The semiconductor shortage that rattled the automotive world since 2020 is far from over. In 2025, ongoing supply chain disruptions, geopolitical tensions, and soaring demand for advanced chips continue to affect car production worldwide.
Automakers depend on specialized automotive-grade semiconductors for everything from engine control to infotainment and safety features. With limited production capacity at a handful of foundries, chip supply remains tight. Combined with rising demand driven by electric vehicles and complex driver-assistance systems, shortages persist.
Car makers like Ford, Toyota, and Volkswagen are still delaying launches or cutting production on key models due to chip scarcity. This bottleneck leads to longer wait times at dealerships and inflated prices new car prices have risen 7–10% globally.
To cope, companies are simplifying hardware features on entry-level versions and investing heavily in in-house chip design projects. Strategic partnerships with chip manufacturers aim to secure future supply.
However, geopolitical tensions particularly export controls affecting key chip suppliers loom as a risk of further disruption. Industry experts warn that normalizing supply may only happen by 2026 or later, as global demand outpaces capacity growth.
Consumers may face higher prices and limited availability in the near term, while automakers overhaul supply chains and innovate around the shortage.
