“Smart” No Longer: Your CURRENT Car and the Chip Shortage

Written by Adam English
Posted December 16, 2021

No one likes surprise car repairs. A whole lot of people are about to find they will face them next year.

And it isn’t going to come from what you’d normally expect.

Sure, the obvious comes up. I just dropped about two grand on a grab bag of common stuff that has been festering for a while but could wait no longer. Everything in the exhaust system, including the catalytic converter, spark plugs and coils, and all the bits and pieces involved with labor.

Fellow Outsider Club founder Jimmy Mengel just waited a couple months for what would have been a common part for his Jeep.

It isn’t just the standard stuff, or the new problems sourcing new parts, or the extended wait times for shipping. A BIG new issue is on its way.

Nearly all cars that have any data systems that tie in to the cellular network are about to turn into digital bricks.

We’re used to most of our devices and the planned obsolescence that they involve. Cellphones are the most obvious. Computer software and operating systems for laptops and desktops make sense. No one ever thought about cars though. Even the car makers.

The short cycle “sunset” system works well enough if devices are relatively cheap and don't retain value. Yet cellular networks for profoundly expensive vehicles, designed to last for twenty or more years, and that were sold at a premium for their features, are going to be treated the same.

The entire 3G system is going to come to an end next year. Nothing will work that is built upon it and the communication systems built into cars, buried deep in dashboards, never designed to be worked on or replaced at all, will need to be replaced en masse.

AT&T, Verizon, T-Mobile... they're all pulling the plug on 3G.

Somehow current year models are still being rolled out that use it as baseline tech. Car makers didn't get the memo, at best, or don't care, at worst. The 3G systems that enabled a profound expansion of data usage worldwide and funneled plenty of extra money to carmakers will now be the reason why all these cars are cut off.

This is not the kind of thing that can be handled by a software update. There is no cheap capacity to upgrade these systems, especially with the chip shortage we’re seeing today, which will only drive up wait times and cost. Nor will there be for years upon years.

The money is in new cars. Not incremental upgrades to navigation systems, concierge services, integrated handless phone systems, or anything else that virtually all cars sold in the last 10 years have integrated as “value added” services.

The need is staggering and it’s a double whammy for consumers.

Carmakers are still losing tons of profit potential from severely limited production. They have no interest in addressing the issue. Nor will they be able to offer cheap upgrade packages with the chip shortage we're experiencing now.

They were blindsided by the limitations of chipmakers and are wildly ignorant of the perpetual crisis that has no end in sight.

Only a handful of companies are putting some serious work into producing higher quality chip designs and production lines that can meaningfully change the equation.

It has never been more clear that they're poised for years of exponential growth.

One in particular stands out as a winner to the Outsider Club's Jimmy Mengel, and his research is already paying off for his Crow's Nest readers.

Take care,

adam english sig

Adam English
Editor, Outsider Club

follow basic @AdamEnglishOC on Twitter

Adam's editorial talents and analysis drew the attention of senior editors at Outsider Club, which he joined in mid-2012. While he has acquired years of hands-on experience in the editorial room by working side by side with ex-brokers, options floor traders, and financial advisors, he is acutely aware of the challenges faced by retail investors after starting at the ground floor in the financial publishing field. For more on Adam, check out his editor's page

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