GM will take a profit hit on the global chip shortage, while Tesla makes its own chip

Get in the e-Hummer, we're going shopping... GM stock has been cruising around all-time highs, thanks to its ambitious plans for an all-electric future (phase out gas-guzzlers by 2035). It also just posted strong quarterly earnings and an upbeat profit outlook for 2021. But GM has a big (tiny) problem: chips.

• The Great Chip Shortage... is unrelated to Lay's, but makes auto makers hungry. The average car contains 50 to 150 chips. Problem: there's a global chip shortage.
• All the WFH'ing we've been doing devoured the chips. When US car sales rebounded quicker than expected, car companies realized they hadn't stocked enough chips to meet demand. Ford had to shut down a plant last month because it was chip-outta-luck.

Seeing the chip bowl half-empty... Despite all the positive news surrounding GM, investors got hung up on its semiconductor problems. Yesterday, GM said it expects lost production from the chip shortage to erode $1.5B to $2B of its 2021 profit. That's about the same L that Ford is expecting to take. GM also plans to extend shutdowns at several of its American factories.

• Meanwhile... Tesla has been using its own self-driving computer chip in some car models since 2019. Elon claimed that the Tesla-designed chip is "the best in the world." Whoa.
• But that doesn't mean it's immune (yet)... to the chip drama. Last month, Tesla said it's working hard to manage through the shortage, which may have a temporary impact.